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Switching PEOs mid year can seem like a daunting task for a number of reasons, but it doesn't have to be!  Here are the 5 things to consider when switching PEOs from February to November!

 

1.) Benefits Plan Years - 

 

All those benefits plan features: Out of pocket Maxes, Deductibles, Pharmacy deductibles reset at the end of the year.  So a mid year change of carriers can leave employees wondering (and rightly so) whether or not all that hard earned money they've paid into deductibles (and in a bad year OOP Maxes) was in vain.  Try telling the person with cancer that's hit their out of pocket max for the year that a change from BSCA to UHC saved the company 5% on their medical insurance premiums... I promise it will fall on deaf ears because you've just reset their 30K OOP Max!!

 

But hold on... it's not all bad news!  Carriers have thought of this and provide clients switching 2 really solid resources to help folks deal with potential disruption.  Deductible carry forward forms (does just what the name implies) and continuity of care coverage (which lets you keep your doctor whether they're in or out of network for acute care needs or ongoing treatments for a specific diagnosis).

 

So just to recap, Out of pocket Maxes will reset, deductibles can be credited towards new plans for the remainder of the year.

 

 

2.) FSA, HSA, 401K, and other Transferrable or non-transferrable benefits -

 

When you come onboard a PEO often times they are what is known as the Plan Sponsor for all things benefits.  This means you're essentially starting over with a brand new FSA program, HSA program, 401K Plan, and so on.  What happens to your old one?  Well some of these things can be transferred over and some can not.

 

Transferrable - HSA, 401K

Non-transferrable - FSA. pet insurances, ancillaries, etc.

 

3.) Taxes already paid - 

 

SUTA is the big one here, especially in states with a ton of salary exposure to SUTA Taxes (I'm looking at you Hawaii and Utah).  If you're pretty far into the year you'll want to make sure you know how your PEO is treating taxes already paid.  Many PEOs will credit those taxes already paid, some can but choose not to unless pressed and others don't have the ability to and will find other ways to make up the cost difference if pressed.  (subtle plug... let us do the pressing for you since we know what to ask and where to look for it in contracts!.

 

It's worth asking about the other big tax categories (FICA FUTA) as each PEO treats these slightly differently in a mid year move.  Transparency is key!

 

4.) W-2's -  I've yet to find a way around this one... every employee will get two W-2s in a year in which you switch to a PEO.  The first will cover the period before the switch, the second the period with the PEO in place.  It's a slight administrative headache, but nothing employees aren't used to as they move jobs mid year all the time.  Just prepare them for it and help them pull W-2's from the old system.

 

5.) The employee facing story - This is the last and probably most crucial point... why the disruption?  The story better be a good one for employees (and it almost always is).  Better benefits, smoother employee experience, enhanced overall employee facing offering, lower 401K fees, additional EAP program, lower monthly premiums, foundations for growth, additional HR resources... you name it and it's usually true in the PEO environment, but not naming it will leave employees wondering why you're making their lives slightly more difficult with mid year disruption.  We can help you craft the message to employees!