Case StudiesSwitching PEOsConsumer food products
How a 75-employee company cut its PEO costs 28% in its first year
A foreign-owned food company with four entities in six states had been with the same PEO for about ten years, still paying admin fees sized for a much smaller company. We turned its confusing bills into one dollar figure and quoted four PEOs against it.
Richard Huldisch, Managing Partner
2 min read
We’re a PEO broker. We work with about 25 PEOs and compare the ones that fit a company; the PEO it chooses pays us, so the comparison is free. Compare your current PEO →
$581K −28%
Less than the client was paying its old PEO at renewal rates: $2,075,000 a year, all in.
Same number of health plans (7), same level of coverage.
- Medical insurance$430K
- PEO admin feesAbout $120 less per employee per month$108K
- Workers’ comp, EPLI and state unemployment tax$43K
Medical savings are annualized and measured against the old PEO’s renewal premiums.
We’re a PEO broker. We work with about 25 PEOs and compare the ones that fit a company; the PEO it chooses pays us, so the comparison is free. Compare your current PEO →
The client at a glance
Six things that made this search hard
Most of these narrow the list of PEOs that can take a company on. The billing made the comparison itself hard. This client had all six.
Mixed
office and factory staff
Mostly office staff, plus a manufacturing arm of about 15%
6 states
most employees in two
Payroll, tax and benefits rules in each
Regulated
headquarters state
Headquartered in one of the most heavily regulated states
Foreign-owned
by a parent company abroad
US operations reporting to an owner outside the US
Complex
billing from the old PEO
Hard to tell what the company actually paid
7 plans
from 2 health carriers
Coverage had to stay as good or better
Problem
The company had been with the same PEO for about ten years. It grew, but the PEO kept charging administrative fees per employee per month as if it were still a very small company, and the company had never negotiated its fees with the PEO.
The PEO’s billing reports were confusing enough that it was hard to tell what the company actually paid. It wanted to test the market without giving up any of the health coverage its employees had.
Solution
We work with about 25 PEOs. After a needs analysis, we identified four that fit this client and quoted all four. First we turned the old PEO’s billing into one dollar figure, so every quote was compared with what the client actually paid.
We walked the client through the side-by-side comparison, then set up several PEO portal demos and Q&A sessions for the client’s whole team, across several departments. The client chose a PEO that serves clients nationwide.
From the market to one PEOExhibit 02 · The Huldisch Group ~25
PEOs we work with
4
fit the needs analysis and were quoted side by side. No PEO can pay for a spot on a shortlist.
1
chosen after portal demos and Q&A with the client’s departments
5 mofrom first call to go-live, set by the case’s complexity and the client’s own timeline. A simpler case takes about half that. How we choose a shortlist, and how we’re paid →
Result
The new PEO met the client’s needs on service, health insurance, technology and price. It offered the same number of health plans at the same level of coverage.
The client had been paying the old PEO $2,075,000 a year at its renewal rates. On the new PEO that came to about $1,494,000: $581K less, or 28%. Medical made up $430K of it on an annualized basis, administrative fees $108K (about $120 less per employee per month), and workers’ comp, EPLI and state unemployment tax $43K.
The client kept one of its two health carriers and replaced the other. We helped through the onboarding period and monitored it to a smooth transition.
What changed, what didn’tExhibit 03 · The Huldisch Group Total annual PEO cost
Old PEO, at renewal rates$2,075,000New PEO~$1,494,000Difference−$581K−28%All in: medical, admin fees, workers’ comp, EPLI and state unemployment tax. Medical annualized.
Stayed the same
- 7 health plansSame number as before
- CoverageSame level as before
- All 6 statesOn one PEO
Changed
- 1 of 2 carriersReplaced; the other carrier stayed
After year one
The first renewal on the new PEO was mixed, and that is where our work continued. The company runs four entities, each with its own federal tax ID. Three renewed at favorable rates. The fourth came back higher because of high medical claims in that entity.
Working with the PEO, we moved that one entity onto its own small-group plan for a year and kept the other three on the PEO’s plan at their favorable rates. At the next renewal, that year’s claims decide whether it moves back.
The first renewal, entity by entityExhibit 04 · The Huldisch Group Entity 1
Favorable renewal
Stayed on the PEO’s plan
Entity 2
Favorable renewal
Stayed on the PEO’s plan
Entity 3
Favorable renewal
Stayed on the PEO’s plan
Entity 4
Higher renewal, high claims
Own small-group plan for a year, then re-evaluated
Worried a first-year price won’t last? Ask, and we’ll show you each PEO’s medical renewal history. Our Preferred PEO Partners give us their last three years, and we can ask any other PEO for it.
Written by
Richard Huldisch, Managing Partner, The Huldisch Group
Same PEO for years, a renewal increase, or a bill you can’t turn into one number? Tell us your headcount, states, renewal date and the health plans you need to keep. We’ll turn your current PEO bill into one dollar figure and compare it, line by line, with the PEOs that fit you.
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