PEO or Small business health benefits provider?
I’m looking into a small business health benefits provider (e.g. Gusto) versus a PEO (Justworks). I understand both use payroll charges to be able to offer benefits. But I’m not sure which is the best option for our small company. We will have five individuals needing health benefits as of October 1, 2019. Any feedback?
I’d lean toward Gusto because you’ll get it all with significantly lower admin fees. And they offer HR and payroll consulting services. The only time I wouldn’t recommend them is if you’re planning to grow past 50-100 employees because of additional labor law reporting requirements. In addition, Gusto provides you with a free 30-day trial (go ahead input data for your 5 employees and see how cool it is!). With Justworks, you’ll get a demo.
Justworks basic PEO rates don’t include benefits, whereas Gusto’s do. But Gusto isn’t a PEO — it’s just really easy-to-use HR/Benefits and Payroll software. If you have someone in your office with just a smidge of accounting/payroll or HR experience, then Gusto’s the best bet. But if you really don’t want to manage any HR stuff, and don’t mind working with a co-employer, a PEO may be a better option.
Another consideration is the cost of benefits. A PEO can often negotiate lower rates due to their buying power, not just for health insurance, but also for work comp. However, you have to weigh those savings with the much-higher per employee monthly fee of a PEO.
Here are some articles you may want to scan to help make your decision:
Questions to Ask Yourself Before you Purchase Employee Benefits
Gusto vs Other Payroll Providers that offer Benefits
Laura, HR Sr. Staff Writer
Thanks for your input, but just wondering: Do you or FitSmallBusiness.com have any affiliation with Gusto or any PEO?
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