Navigating the Waters of PEO and Healthcare Renewals: A Strategic Guide for Businesses

As the calendar flips through its pages, certain times of the year stand out for businesses, particularly when it comes to healthcare and Professional Employer Organization (PEO) renewals. Understanding the rhythm of these renewal seasons is not just about when does the open enrollment period start; it's an opportunity to reassess, negotiate, and potentially enhance the benefits offerings to your employees. With renewal milestones typically centered around key dates like January 1st or June 1st to name just a few, let's dive into why these periods are pivotal and how your business can navigate them with finesse.

The Significance of Renewal Seasons, and Why They Exist

Renewal seasons are not randomly scattered across the calendar. They are strategically placed, with January 1st leading as a significant date with over 45% of healthcare plans being up for renewal. This period is closely followed by other critical dates: June 1st, October 1st, and November 1st. These are not just arbitrary dates but represent windows of opportunity for evaluating your current healthcare and PEO arrangements. The essence of these periods is to ensure your business and its employees are getting the best possible deal, thereby keeping your broker or PEO accountable and transparent.

Why is January 1 so popular?? The first of the year is a popular date as it aligns the calendar year with your benefits usage.  It’s more than likely as a small to medium sized business that your benefits (deductible, maximum-out-of-pockets, and financial vehicles like FSA) are tied to the calendar.  Which means your balances and ability to participate in them all start fresh each year on January 1st.  When your renewal is aligned to New Years Day that creates the easiest and most informed experience for your employees. When companies are “off-cycle” with the calendar, it can be challenging when the employer needs to make changes to the plan to address cost increases presented at renewal leaving them with limited (or even sometimes undesirable) options.

Harnessing PEO Benefits During Renewal Season

When renewal season looms, it brings with it a mix of anticipation and dread, often due to the complexities and unknowns involved in the renewal process. However, aligning with a PEO can significantly alleviate these challenges. PEOs, with their formidable partnerships with national health carriers such as Aetna, BCBS, Cigna, UHC, Oxford, Kaiser Permanente, and Humana, offer an array of benefits not readily available in the small group open market.

And sometimes more importantly, their big risk pools and large economies of scale provide a haven for a “bad renewal.”  Due to the buying power and the countermeasures they have to mitigate claim impact within their plans, they can provide a very attractive option from your benefits strategy.  They can “buck” the trend of your current renewal and help you maintain a competitive benefits package that operates within your budget.

Tell Me More About These Competitive Benefits 

Another significant advantage of partnering with a PEO is access to Fortune 500 style benefits, enabling small to medium-sized businesses to offer competitive benefits packages. These packages are not just limited to health insurance but extend to dental, vision, short and long-term disability, life insurance, and even pet insurance and legal aid. This broad spectrum of benefits is made possible due to the collective bargaining power of PEOs, ensuring that even businesses with as few as 10 employees can provide better benefits than a larger company.

Simplified Administration

The administrative burden of managing benefits, from enrollments to claims and COBRA management, can be overwhelming. PEOs streamline these processes, handling the intricate details of benefit administration, thus allowing businesses to focus on their core operations. The efficiency brought about by PEOs in managing these administrative tasks cannot be overstated, with most renewal processes being handled seamlessly and often resulting in single-digit renewal rate increases.

The Strategic Approach to Renewal Seasons

Approaching a renewal season requires a strategic mindset. It's an opportunity to reassess your current arrangements and explore the market for better deals. Transparency with your current PEO about renewal scenarios is crucial, as is the readiness to explore alternative solutions, including health insurance carve-outs or external benefits administration.

Moreover, the renewal season is a prime time for clear and proactive communication with your staff. It's essential to convey the due diligence being conducted on their behalf to potentially transition to more beneficial health plans or PEO arrangements. This openness not only builds trust but can also enhance employee perception of the company's commitment to their well-being.

With A New Season, Comes Hope

The annual renewal seasons offer a significant opportunity for businesses to reevaluate their healthcare and PEO partnerships. With strategic planning, transparent communication, and a focus on leveraging the comprehensive benefits and administrative ease provided by PEOs, businesses can turn this potentially daunting time into a period of positive transformation. By doing so, companies not only ensure they are getting the best possible deals but also reinforce their commitment to their employees' health and well-being, fostering a more engaged and satisfied workforce.