A Good Sense Alternative For Employee Health Coverage

Professional employer organizations gaining clout but at a slow rate

NJBIZ — Monday, July 6, 2009

By Martin C. Daks

IN THE NINE YEARS that Melba Bonelli has run Dental Choice P.C., the Marlton dentist has been frustrated by health care costs. President Barack Obama says he has a solution, but some people say an alternative already exists: professional employer organizations, or PEOs.

"I've never been able to find a plan with reasonable coverage and premiums that my employees can afford," said Bonelli, who has 10 people — including part-timers who she said are not currently eligible for employer-sponsored coverage — on her payroll. "So right now we're on a low-premium, high-deductible plan that forces covered employees to pay up to $4,500 out of pocket before the coverage kicks in."

Her frustration, which is echoed by many small-business owners that say they're struggling with health care insurance choices, has helped spur Obama to call for a so-called public insurance plan, open to everyone and backed by the federal government, that would compete with privately managed plans.

It's a controversial idea that has generated opposition from national health insurance trade groups like America's Health Insurance Plans and Blue Cross Blue Shield Association.

But Dan Sheridan said PEOs, which typically take on a small business' employees and handle human resources duties, such as payroll and benefits management, may be an alternative. Sheridan is chief marketing officer of Extensis, a Woodbridge-based PEO.

Under a PEO, workers from multiple small businesses are typically aggregated under a single PEO-employer, giving the organization some degree of leverage when it comes to negotiating health care insurance costs.

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