PEO insurance is a type of insurance administered by a Professional Employer Organization (PEO). This organization often provides employee health insurance, but could also offer other types of insurance that would benefit employees, such as unemployment insurance or life insurance.
A Professional Employer Organization (PEO) provides payroll and HR solutions for client companies, ensuring compliant payroll, tax withholding, and HR services for employees. Where the PEO operates internationally, it is known as a Global PEO or International PEO.
Some countries do not mandate employer-provided health insurance, but it is customary for employees to expect it nonetheless. In other cases, businesses elect to offer private health insurance as a voluntary benefit to make working with the company more attractive.
Other types of insurance that a PEO may choose to provide include: workers’ compensation, liability, and property insurance.
Workers Compensation
Workers compensation is a type of insurance that reimburses employees for lost wages in the event of an injury, rather than filing a negligence lawsuit against the employer.
Disability Insurance
Disability insurance provides income replacement for workers who become disabled and are unable to continue working. Benefits can be used to cover living expenses, medical treatments and other costs associated with the disability.
Life Insurance
Death is a difficult time for any family, and life insurance can help ease the burden by providing a lump sum payout. This can help cover costs like funeral expenses or outstanding debts.
Unemployment Insurance
Unemployment insurance is a benefits program that provides supplemental income to individuals who have lost their jobs. Unemployment insurance is usually jointly funded by employers and employees, and it provides more financial assistance than what is typically available through social security or social welfare programs.
The original motivation for employers outsourcing health insurance may have been simply due to the efficiency benefits: By having a third party provide the insurance, the client company could focus on its core business.