Do employers have the choice of which health insurance company they desire to use when working with a PEO?
The answer may be yes or no depending on the employer’s particular needs. Most national PEOs use one of the 5 national insurance companies for their “master health insurance plan” and occasionally use other regional insurance companies for smaller population areas. The most common “big 5 national plans are Blue Cross & Blue Shield, United Healthcare, Cigna, Aetna, and Humana. The master plans consist of all or most of the co-employed individual employees through the PEO. These plans are experience-rated and there could be experience-rated PEO master contracts with different PEO master company rates from the same group health insurance company (based on their claims experience).
Most PEOs allow 5 or more insurance company plan choices for each employer. These may include PPOs, HMOs and or POS plans with varying deductibles, co-pays and coinsurance. Some smaller PEOs don’t have master insurance plans and only use non-experience rated community-based plans. If an employer has exceptional experience and/or great demographics they may wish to pursue experience-rated or possibly self-funded group health insurance. State insurance laws, based on where your company or where the PEO is headquartered, may have different rules concerning self-funding options for PEOs vs individual company programs.