Why Rising Health Care Costs Make Now the Perfect Time to Consider a PEO for Your Small Business
With the recent news from Mercer that employers are bracing for a third consecutive year of significant health cost increases in 2025, small business owners are facing an urgent question: How can we continue to provide quality benefits to our employees without breaking the bank?
If you are a small business owner feeling the pressure of rising health care costs, it may be the perfect time to consider partnering with a Professional Employer Organization (PEO). Here’s why:
1. The Impact of Rising Health Care Costs on Small Businesses
Health care costs have been steadily increasing, and small businesses are feeling the impact more than most. According to Mercer's survey, many employers are expecting another year of high growth in health costs, with some businesses forecasting a rise of up to 8%. Unlike larger corporations, small businesses often lack the negotiating power to secure favorable rates from insurance providers, making them more vulnerable to these increases.
For many small businesses, this could mean difficult choices, such as cutting back on benefits, passing on more costs to employees, or, in worst-case scenarios, considering layoffs. This is where a PEO can make a significant difference.
2. How PEOs Help Small Businesses Manage Health Care Costs
PEOs partner with small businesses to provide access to health benefits and other HR services, allowing them to operate more like larger companies. Here’s how:
- Economies of Scale: PEOs pool together multiple small businesses, which increases their buying power and enables them to negotiate better rates with health insurance carriers. This can result in significant savings on health care premiums.
- Expert Guidance and Compliance: Navigating health care regulations and benefits can be complex and time-consuming. PEOs have experienced HR professionals who stay up-to-date with the latest changes in health care laws and regulations, ensuring that your business remains compliant while providing competitive benefits.
- Better Employee Retention and Attraction: Offering robust health benefits is crucial to attracting and retaining top talent. A PEO allows small businesses to provide benefits comparable to those of larger companies, giving you a competitive edge in the job market.
3. Why Now Is the Time to Consider a PEO
With the trend of rising health care costs expected to continue, now is the time for small businesses to take proactive steps. Waiting until costs escalate further can limit your options and force reactive decisions. Partnering with a PEO now allows you to:
- Lock in Lower Rates: By joining a PEO, you may have the opportunity to lock in lower rates for a longer period, providing more predictability in your budgeting.
- Focus on Growth, Not HR Headaches: With a PEO handling HR-related tasks such as payroll, compliance, and benefits administration, you can focus on what you do best—growing your business.
- Prepare for Future Challenges: Rising health care costs are just one of many challenges businesses face. A PEO partnership equips your business with the support and resources to navigate these challenges effectively.
4. Stream HR Can Help You Navigate Your Options
At Stream HR, we specialize in helping small businesses like yours evaluate PEO options that fit your unique needs. We understand the challenges of rising health care costs and are here to provide expert guidance, streamline your decision-making process, and connect you with the best PEOs for your business.
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Rising health care costs are creating significant challenges for small businesses. However, by partnering with a PEO, you can leverage better rates, access expert HR guidance, and provide competitive benefits to your employees. Now is the perfect time to explore this option and take control of your health care expenses.
Contact Stream HR today to learn how we can help you find the right PEO solution for your business.
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