Lori Frucht FAQs Leave a Comment

Here are some of the frequently asked questions we received from our webinars. Feel free to contact us if you have any questions or want more information, at info@peospectrum.com.

Can the client be liable for something the PEO does?

In most cases, no.

In our experience we don’t see clients facing any penalty for something the PEO has done wrong. There is however the risk, like the risk we have with many vendors, for catastrophic failure of a vendor. For example, the PEO is run by a criminal, the PEO goes belly up, and doesn’t pay the payroll taxes on behalf of a client. This has happened before. It is 100% the reason why we believe so whole-heartedly in PEO accreditations like ESAC and the IRS as they not only provide bonding to protect the client but perform background checks and audit for levels of financial stability.

ESAC is proud to say that since 1994 (its founding) none of its PEOs have ever had a default and needed to use the bond. The vast majority of our clients are with PEOs that have every accreditation a PEO can possibly have.

Different companies have different exposure to WC’s so how could all be in the same pot?

If a PEO has one client that happens to have a catastrophic workers comp claim, or rather multiple catastrophic claims, it is likely that the specific client that made the claim will receive an increase in price from the PEO. It is also highly likely that other clients with the same PEO, using the same workers comp carrier will see no increase at all.

However, if the PEO has a majority of their clients make high claims, and the PEO wasn’t charging the appropriate premium because essentially they are a poorly run PEO it could negatively affect all clients of that PEO. It is best practice to understand the client base of the PEO you are considering.

If you a tech company, you don’t want to work with a PEO that caters to high-risk industries. Yet again an especially important reason to require a PEO with a high level of accreditations.

Does the PEO have the health insurance plan that the employees participate in? Or does the PEO just administer the company’s regular health insurance plan?

In the case of a multi-employer health policy, or a master policy, whereby the PEO is combining multiple companies on the same policy (think large PEOs) then Yes, the employees participate in the PEOs actual health insurance plan.

If the PEO is “carving-out” health insurance, or using a single-employer policy specifically for one client (think smaller PEOs) then No, the employees are participating in their direct employers’ policy and the PEO is likely just helping to administer the policy.

At PEO Spectrum in most cases we quote both options for clients as depending on the client either could be ideal for them.

EEO and ACA reporting is handled by PEO?


Is there any interest on the quality of the benefits, not only health, or the focus is to save money on the premium and the requirements asked for by the corporate decision makers?

When we state that PEOs can save clients 10% or 50% on health insurance we do so under the premise that the plans are equal in quality. We at PEO Spectrum, and most PEOs, will often construct health plan side-by-sides so that the clients can see not only the pricing differential but also the specific plan description (which details copays, deductibles, etc.)

So a small convenience store and a small law firm could end up with the same health insurance plan?

Yes. When a PEO offers their multi-employer health insurance policy, or master plan, they are combining multiple companies on the same policy. It is important to understand a PEOs historic health insurance increases to get a sense for how well they have managed their book of business and to predict future increases.

What does HCM ASO stand for?  Thanks!

Human Capital Management, Administrative Service Organization. Both typically describe the same type of vendor, which is generally a payroll company that also offers HR, benefits, and technology. However, neither offer a co-employed solution like a PEO does.

What does your company charge?

PEO Spectrum’s service is 100% free for our PEO Comparison service.

What were the 2 types of health insurance offerings that a PEO offers that we should ask about so we know which kind we are getting?

1) Multi-employer, or master policy, where they are combining multiple companies on the same policy (think the large PEOs).

2) Single-employer policy where the policy is just for one company, which is exactly what you can get from a broker. The benefit of using a PEO in case 2) is the PEO’s ability to put the policies on their HRIS system to allow for online access, enrollment, etc.

Who makes the decision about the insurance contracts design–the client or the PEO?

PEOs will often have 10+ health plans available for clients to choose from. Generally, they ask to the client to limit the amount of offered plans to 4. However, several believe in offering all plans to employees to provide maximum choice.

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