As the coronavirus pandemic eases and awards season approaches, the nation’s small businesses are preparing for the new normal. What remote work policies will you have? Are you building cash reserves in case of a major recession? What changes should you make to hiring, vendor, and contract bidding practices?
One of the most important decisions you can make over the next few months is how to provide health insurance to staff. California’s state-run health insurance agency projects that premiums could nationally spike by as much as 40 percent in 2021 thanks to COVID-19. We don’t know many government contractors that can sustain such a massive increase, which is why we recommend considering a long-term agreement with an IRS-Certified Professional Employer Organization (CPEO) to:
- Reduce health insurance costs
- Remove a lot of your HR and compliance headaches
- Improve your bidding accuracy
- Grow faster
PEOs are outsourced HR firms that aggregate their clients’ staff to dramatically reduce and contain health care costs through leveraging greater buying power than any company could do alone. The agreement also allows you to shed many of your HR headaches – including tax filings and EEOC compliance – to a company that specializes in keeping pace with changing laws and standards.
We especially recommend a long-term agreement with a PEO because you will see a consistent, and more nominal annual increase to insurance costs, rather than the highly volatile and rapidly changing open market in which many companies find themselves. This will keep your finances simple and help you bid more accurately for greater profit.
Best of all, shifting insurance headaches to a PEO allows you to focus on your company’s growth instead of back-end work. We suspect that most government contractor executives would rather fulfill a contract than spend hours each week banging their head against a desk.
A PEO isn’t for everyone, and not all PEO’s are created equal. Some may have limited insurance plans to choose from, and others may traditionally broker their medical plans. Pricing can be complex, and your company may also give-up some of its independence to the PEO, so be sure to vet thoroughly.
If you’re a small business government contractor concerned about a possible health insurance spike in 2021, contact us for a referral to a trusted PEO partner that can provide a free analysis of your company’s health insurance policies and needs.