Hacker News Reader

Comment by mattzito | Hacker News Reader

Also, something I don't see people talk about as much as they should (perhaps because startups are staying smaller these days), but if you have 8-10 employees or more you should be looking at a PEO.

We used Insperity/Administaff, and our healthcare rates went down by 30% and the coverage got dramatically better. Plus, they added all these adjunct benefits that big companies typically offer that few people use, but don't hurt to offer your team - free legal advice, adoption assistance, cheap LTD and life insurance (and a free life insurance policy for everyone), and so on.

They were organizationally harder to deal with than our previous payroll provider, but it was one of the better backoffice decisions we made period.

View on HN

Having analyzed Trinet plans against readily available group plans, I don't think PEOs are necessarily better in terms of health insurance, though that probably depends on how good your broker is.

I wouldn't be surprised if location, coverage type, etc. mattered quite a bit, and it's possible that in the last few years it's become less appealing.

But I remember having a conversation with a friend-of-a-friend who worked as a health insurance advisor or broker (don't remember which) told me quietly that up to around 250 people, you can generally get much better rates from a PEO than from the provider directly (assuming you negotiate hard), and that she thought more companies should be using PEOs. She also felt that the reasons more companies didn't was having to basically turn over the whole benefits and payroll function to a third-party, and the loss of control therein.

So - again, I'm sure there's variability, and you should look at all your options, but I think PEOs are something that startups should be considering in the mix.

One thing to consider is that even with the lower rates you can get from a PEO, you're paying a setup fee and a monthly administration fee that, for a company of 8-10 people, may not make the lower insurance rates worth it.

Startups innovating in the space like ours, Maxwell Health (http://www.maxwellhealth.com), are able to offer way better tech and valuable services for startups and do all of it for free. We've been able to save money for companies who were currently using your typical PEO.

Reply on news.ycombinator.com