How much do PEOs really cost?
The short answer is you have to look at them as a total package, because some PEOs charge a lot for administrative fees and have very low health insurance premiums and workers comp premiums and some of the opposite. In general, admin fee are from $80 dollars to a $ 180 dollars per employee per month. There are tremendous differences in costs among these PEO’s – and watch out for hidden fees! But usually this cost is more than absorbed by the savings – about 75% percent of the time the net savings are serious, and a responsible HR director or CFO should get a quote.
The price of a PEO is based on a combination of things within a bundled price. Sounds like a vague answer but it’s not. These massive buying groups can now save even more money in purchasing benefits than they used to! Sometimes up to 30% for the same plans and often the same carriers (same with Workers comp and sometimes with SUTA as well).
The total cost of the PEO is a combination of the cost of the Administration, (Payroll, HR, Compliance, Time and Attendance etc.), Worker’s Compensation, Medical, Unemployment and a few other services. Generally, when people ask how much does a PEO cost they’re really thinking about the administrative fee, but you really have to think about the total cost and then compare it to your current expense for the apples and apples products and services.
Not only do they save you money over the first year, but they continue to have Lower Renewals than the private market.
(other related FAQs – how much time is involved to get quotes, are they really different and how do I make sure I get the best price and most importantly that I don’t pick the wrong PEO – hint – you can not trust the PEO direct salespeople)