Shopping for Professional Employer Organizations (PEOs) in New York? Check out these 3 tips before making a decision.
In the last 10 years, New York has transformed from a barren desert to a thriving ecosystem in terms of PEO market penetration. Almost every national PEO has a foothold here, and there are also some interesting boutique players making ripples as well. Options are a good thing, but they also increase the risk of getting into bed with the wrong vendor. Be mindful of these tips when considering New York PEOs.
Tip #1: If you have less than 50 employees enrolled in healthcare and you haven’t received multiple quotes from the PEO industry, you need to do so. We’ve helped some New York companies save 50% on their health insurance overnight.
New York’s health insurance market for small business (less than 50 employees) is community-rated. This basically means that your company’s health insurance rates have almost nothing to do with your company’s demographic makeup, which is the crux of what real health insurance underwriting is all about (younger people are usually healthier = less use of healthcare = less price for healthcare).
Professional Employer Organizations coemploy with their clients, which essentially allows them to form a conglomerate of smaller companies for the purposes of procuring health insurance. Using their buying power and their ability to underwrite and take demographics into account can result in impactful cost savings, or vice versa for an older population.
Tip #2: Use PEO Spectrum’s free PEO Comparison service to quickly shop multiple PEOs.
A 15 minute conversation to cover your company’s goals & challenges, 15 minutes in gathering a few underwriting documents, and the rest is on us.
Based on what you’re looking for, we’ll identify 3-5 top vendors that fit your needs and provide you with a customized financial comparison, as well as PEO reviews, benchmarks, and service comparisons.
If you see something you like, we’ll help guide you through the next appropriate steps; if not, you at least know you’ve done your homework.
Tip # 3: Keep your eye on the State Unemployment Rates that a PEO quotes.
One of the biggest misconceptions amongst our clients is that ‘taxes are taxes’ and that each PEO will charge equally for tax obligations. Although this may be true for Federal payroll taxes, it is most certainly not for state unemployment payroll taxes.
PEOs have the ability to adjust state unemployment rates within the statutory limits, which in New York can be anywhere from 1.5% to 9.9% of the first $8500 of payroll for each employee, a $714 per employee difference. This range can increase in other states, especially New Jersey, where state unemployment rates are out of control.
So don’t let a PEO bundle state unemployment rates into a percentage of payroll; be stern and demand transparency!