Stop the Madness: Contain Health Insurance Premiums
By Chris PetersonFirst published Updated
The short answer
A PEO can help contain health premiums by putting your employees on its master health plan, a large pooled group with buying power one small company doesn't have, and by handling enrollment, claims questions and annual rate negotiation. Your rate still depends on how your group is underwritten, so compare plan by plan.
Premiums keep climbing: the average employer family health premium was $26,993 in 2025, up 6% from 2024, and single coverage averaged $9,325, up 5% (KFF Employer Health Benefits Survey, 2025). Family premiums are up 26% over five years.
Even if your premiums have risen more slowly, health coverage is a major expense. Employers know benefits matter for hiring and keeping people, yet many have had to change their plans just to hold costs down.
How do employers usually try to contain health costs?
- Adding a high-deductible plan option
- Raising the share of the premium employees pay
- Increasing co-insurance
Each of those moves shifts cost onto your employees. A PEO is another route.
How does a PEO help with health premiums?
Economies of scale. Whether you're making widgets or buying health insurance, buying for a bigger group lowers the unit cost. A PEO bundles many companies into one large group, which gives it buying power a single business with 10, 50 or even 300 employees can't match. PEOs have their own master health plans with their own premiums, and those plans aren't sold on the open market.
A PEO also runs the plan: it administers enrollment, helps with claims and negotiates rates each year. That keeps the plan monitored and gives you time back for the business.
Will a PEO's plan always cost less?
No. A PEO's large-group plan can be priced using your group's health and claims. In Colorado, a PEO plan covering more than 50 employees in total follows large-employer rules (C.R.S. 8-70-114), while small-group plans for companies of up to 100 employees are community rated (C.R.S. 10-16-102). A healthy group may price better through a PEO; a group with large claims may price worse or be declined. The way to know is to compare real quotes, plan by plan.