PEO-integrated health insurance:
when you outsource HR, the benefits piece tags along.

A PEO runs on a fully-insured master policy, so the carrier prices it off the demographics, claims history, and state benefit mandates where your covered lives actually sit. States with heavy mandates like New York, California, Massachusetts, and New Jersey routinely run 25 to 40 percent higher than lighter-mandate states like Texas, Florida, Tennessee, and Arizona. Rates also move by carrier. Most PEOs bring several to the table and let you choose at open enrollment, so the 'PEO rate' is really four to six carrier rates bundled together. The larger the PEO, the wider that menu. TriNet, ADP, Insperity, and Sequoia carry the deepest carrier lineups.

Inside a PEO, you are generally working from the plan menu the PEO sponsors, choosing among the carriers and designs it has already negotiated. Running your own self-funded plan or ICHRA inside that arrangement usually is not on the table, since the whole model leans on bundling fully-insured carrier products. A few of the bigger names, like TriNet's ASO track or Sequoia's custom setups, open alternative funding to clients above 50 employees. By the time that fits, you are often better off leaving the PEO and running benefits on your own. Under 50 lives, the PEO's all-in price tends to beat doing it yourself; past 100, the bundle starts losing its edge.

Most PEOs land between 18 and 35 dollars per employee per month in 2026, depending on sponsor, headcount, industry, and how much sits in the bundle. That fee usually covers payroll and tax filing, HR consulting, ACA and FMLA administration, employment-practices liability coverage, an enrollment platform, and access to the master health plans. The health premium itself is billed separately. The top of the range, above 30 dollars, buys richer HR support; the bottom, near 18 to 22 dollars, is administrative only. Workers' comp is rated on your class codes as a share of payroll, separately again. To compare honestly, add PEPM times twelve times headcount, plus comp on payroll, plus the employee share of premium. Most owners look only at the PEPM and understate the real cost.

Three signals tell you the PEO has done its job. Your headcount pushes past 75 to 100 employees and the bundle stops being the cheap option. You have brought real HR in-house, with a director or at least one dedicated HR person. Or you want plan-design features the PEO simply cannot fit, like a custom or alternative-funded health plan. Unwinding is not quick. The co-employment relationship has to come apart, workers' comp moves to a standalone policy, payroll migrates, and benefits get re-sourced. Give it 6 to 9 months and time the exit to your renewal date so the calendar lines up. Expect the first year on your own to cost more in HR while you pay full price for what used to be bundled.

Inside a PEO, the PEO effectively is your broker on the master plan. It lines up the carriers, negotiates rates across its whole book, runs enrollment, and manages compliance, so a separate broker for that plan is usually redundant. Where a broker still earns a seat is on the pieces the PEO does not bundle, like executive medical, supplemental life, or key-person disability, which often move through an outside agent. A few PEOs will let you keep an external broker of record on the master plan, but it is rare and seldom shifts the math. Plenty of employers end up with a hybrid setup: the PEO on the core plan, a broker on everything around it.

Yes, and this is where a PEO really pays off for trade businesses. The PEO carries a master workers' comp policy over all its client co-employees, then rates each one on its class codes. For expensive trades like roofing, framing, and manufacturing, that scale often lands comp rates 15 to 30 percent below a standalone policy. You end up with health, workers' comp, payroll, and HR on one bill and one number to call when something goes sideways. For owner-operators in construction, manufacturing, and transportation, the combined package frequently beats a standalone broker plus separately sourced comp by 20 to 30 percent on total cost, and that is before you count the hours saved coordinating it all.

A PEO is a co-employment deal. It files taxes under its own EIN and owns the master health and workers' comp policies. An ASO is administration only: it processes your claims and runs the plan, but you stay the sole employer and own the underlying coverage. PEOs come bundled with HR, payroll, benefits, and comp. ASOs are stripped down, usually just claims handling for a self-funded plan. A small shop that wants to hand off all of HR reaches for a PEO; a larger employer that wants to self-fund while keeping HR in-house reaches for an ASO. They are not rivals, just built for different sizes. Most PEOs do not run ASO deals, and the big ASO names like Cigna, Aetna, and BCBS do not sell PEO services.