Is a PEO Really the Best Fit for Your Business?
Professional Employer Organizations (PEOs) can offer small businesses an attractive package: bundled HR, payroll, and benefits services, all tied together with the promise of simplicity. For very small or early-stage companies, this "one-stop shop" approach can seem like the easiest way to get up and running.
But as businesses grow, many find that the realities of a PEO arrangement no longer work in their favor — especially when it comes to cost, flexibility, and control.
The Hidden Costs of a PEO
While PEOs often market themselves as cost-effective, the truth is that administrative fees typically rise as a business adds employees and scales operations. Pricing is usually based on a per-employee-per-month (PEPM) model, with bundled services that may or may not align with what a company actually needs. Over time, employers may find themselves paying for HR services they no longer use, outdated benefit plans that don't meet employee expectations, and technology platforms that are inflexible and difficult to integrate with other systems.
Additionally, PEOs frequently increase administrative fees during renewal periods without clear explanations. These rising costs — paired with renewal-driven medical premium increases — can quickly outweigh the initial simplicity the PEO model promised.
Flexibility and Control Are Limited
Another common challenge with PEOs is the loss of flexibility. Most PEOs offer a standardized set of benefit plans and contribution structures, limiting your ability to customize offerings that align with your employees’ needs, your recruiting strategies, or your company's financial goals.
Changes to benefits, payroll processes, reporting, or compliance practices often require going through the PEO’s central system — meaning slower turnaround times, less agility, and less ability to tailor your HR and benefits strategies as your company grows.
Over time, employers can find themselves locked into programs that no longer fit their workforce or company culture.
Service Experience: From Partnership to Call Center
As companies grow, they often expect — and need — more personalized service. But many PEOs rely heavily on centralized service models. What initially felt like a helpful bundled solution can start to feel impersonal, with support handled through rotating representatives or call centers rather than dedicated teams who understand your business.
When benefits, eligibility, or billing questions arise, having a partner like PPI working directly on your behalf — with support from carrier customer service teams — can make a major difference in the speed and quality of resolution.
Protecting the Flexibility and Service You Value
At PPI Benefit Solutions, our focus has always been on delivering the flexibility, transparency, and support that growing businesses need — without the hidden costs or rigid limitations that often come with bundled PEO services.
Working with PPI and your broker, you continue to benefit from:
- A benefits strategy built around your workforce and goals — not a standard offering shared across a pool of employers.
- Consolidated billing, COBRA administration, managed carrier feeds, and compliance resources that simplify administration while keeping you in control.
- Flexible payroll integration options, including file exchanges with major providers, to streamline data without forcing you into a single system.
- Dedicated support teams who work directly with you and your broker to deliver personalized service — not a call center experience.
While you and your employees can access carrier support directly for claims, ID cards, and customer service questions, your benefits strategy, plan negotiations, and administration are handled by partners who advocate for your best interests — and who understand your evolving needs as you grow.
A Real-World Example
Recently, a New York-based employer with 65 employees transitioned away from a PEO after encountering a 67% medical premium renewal increase and growing frustrations over service and plan complexity. By returning to a stand-alone model and working with PPI, they cut their renewal increase by more than half, saved over $150 per employee per month in administrative fees, and implemented a streamlined benefits package better suited to their team. Read more about it here.
Thinking About Your Options?
If you’ve been approached by a PEO — or are considering your options — it’s important to weigh the real costs, flexibility, and service experience you'll need as your business grows.
As your partner, we’re here to help you stay in control of your benefits strategy and administration — and to deliver the level of service you deserve.
Have questions?
Reach out to your PPI account manager to learn more about how your current solution compares.