PEO Vs Traditional Broker: What Small Businesses Should Know
Choosing between a PEO and a traditional broker is one of the most common questions I get from small businesses. Both approaches can work well. The right answer depends on your size, your goals, how you manage HR and payroll, and what level of flexibility you need with benefits and costs.
I work directly with multiple PEOs as well as major carriers for traditional group health plans. My role is simple: help you compare both options side by side so you understand the tradeoffs and can choose the setup that actually works for your company.
What A PEO Is And What It Solves
A PEO works under a co employment model. You remain in control of your company, but the PEO technically becomes the employer of record for tax and benefits administration. They combine HR, payroll, workers compensation, onboarding, and benefits under one system.
A PEO can be helpful if you want a bundled structure that centralizes compliance, new hire onboarding, HR tools, tax filings, and employee benefits. Many early stage companies like the simplicity, especially if they do not have internal HR.
Where PEOs Can Become Limiting
A PEO can also be more expensive or less flexible depending on your headcount and plan choices. Some companies outgrow the model once they reach certain employee counts or once they want more direct control over plan design, networks, contributions, or ancillary benefits.
Common pain points I hear include limited carrier or plan choices, difficulty adjusting contributions, payroll and admin fees increasing over time, or wanting more flexibility in plan structure long term.
How A Traditional Broker And Carrier Setup Works
With a traditional broker structure, your group health plan sits directly with the carrier. You keep full control over plan design, contributions, networks, deductibles, whether to offer HMO, PPO, HSA compatible options, and whether to add dental, vision, life, disability, or HRA and HSA setups.
You also choose your payroll and HR systems independently. Many companies prefer this because it separates each service and allows them to negotiate each component individually.
For many small to mid sized employers, a traditional setup can be more cost effective long term while offering more flexibility and control.
We Work With Both PEOs And Carriers
My job is not to push you in one direction. I work with multiple PEO platforms and all major group health carriers, which lets me help you compare both paths cleanly without bias.
I work directly with leading PEO providers, including TriNet, Justworks, Rippling, ADP TotalSource, Paychex PEO, Insperity, Vensure, and Engage PEO. These are the platforms most small businesses evaluate when deciding whether to stay with a PEO or move to a traditional broker and carrier setup.
Because I already work with these PEOs, I can help you review real costs, administrative fees, plan flexibility, contribution strategy, and long term scalability. If a PEO is the better fit, I help you move in that direction. If a traditional structure gives you more control or improves long term cost stability, I help you build that instead.
PEO Vs Traditional Broker Comparison
| Category | PEO | Traditional Broker |
|---|---|---|
| HR & Payroll | Bundled under one system | Choose your providers independently |
| Cost Structure | Per employee fees + premiums | Premiums only (plus optional HR tools) |
| Plan Flexibility | Limited by PEO’s carriers and designs | Full flexibility across carriers and networks |
| Scaling | Can become expensive as headcount grows | Often more cost effective as you scale |
| Control | PEO controls billing and structure | You control every component |
TriNet, Justworks, ADP, Rippling, and Paychex: Common Comparisons
A lot of small business owners compare traditional brokers against PEOs like TriNet, Justworks, Rippling, ADP TotalSource, and Paychex. Each offers strengths. TriNet and Justworks offer strong HR support. Rippling offers a modern HRIS and payroll system. ADP TotalSource is widely recognized, and Paychex provides long standing administrative support.
The question is not whether these platforms are good. The question is whether they are the right fit for your company size, your growth plans, and the level of flexibility you want with your health benefits.
What I Recommend For Most Companies
If you are under about ten employees, it is worth evaluating both a PEO and a traditional broker setup. The structure and administrative support of a PEO can make things simpler early on.
Once you reach twelve to fifteen employees or more, it is worth comparing traditional health plans because the flexibility and long term cost control often improve at that size.
Need Help Reviewing Both Options?
If you want a neutral review, I can walk you through your current setup and prepare a side by side comparison of your PEO versus a traditional structure. This usually includes benefits comparison, total compensation analysis, employer costs, employee experience, contribution strategy, and plan design flexibility.
If you want a broader overview of your health insurance options, you can also visit my
Health Insurance page.
If you would like to schedule a review of your current PEO or explore a traditional broker and carrier setup, you can contact me here:
Request a benefits review.
Frequently Asked Questions
Is a PEO always more expensive?
Not always. It depends on your headcount, payroll, plan choices, and administrative fees. A side by side comparison usually gives the clearest answer.
Can I leave a PEO mid year?
It depends on your contract terms and plan structure. Many companies can transition at renewal. Others may have mid year options depending on the carrier.
Is a broker better for growing companies?
Often yes. Traditional plans give more flexibility and cost control as the team grows. But smaller companies may still benefit from a PEO structure.