Small business employers now cite controlling healthcare costs as their top strategic priority for benefits. Here’s how PEOs can deliver value.
Small business employers, already facing a spate of financial pressures from years of inflation, now find themselves facing an even greater challenge: Employee healthcare costs.
Two-third of small business employers say managing medical insurance takes up a disproportionate amount of their team’s time and budget, reports MetLife’s 24th Annual Employee Benefit Trends Study. And controlling healthcare costs is now the #1 priority for investing in benefits among small business employers — outpacing attracting and retaining talent for the first time ever.
This shift presents an opportunity for professional employer organizations (PEOs), who are uniquely positioned to help worksite employers — many of whom oversee small businesses — bolster co-employee well-being to manage healthcare costs, as well as drive other key talent metrics across the organization.
How employee well-being shapes outcomes at work
To truly address rising healthcare expenses, employers must address the problem at the root: Lagging employee well-being.
A workers’ holistic well-being — their physical, mental, financial and social health — greatly influences how they show up at work. Poorer health outcomes drag down productivity, erode engagement and increase the rate at which employees take sick days, indirectly driving up costs for employers.
When employees are holistically healthy, on the other hand, our research shows they bring their best performance to work. Holistically healthy employees are 1.5x more engaged, 1.3x more productive and they’re also 1.3x more likely to remain with their employer, compared to employees who are not holistically healthy.
Benefits directly drive key talent metrics at worksites
While several factors, from access to career development opportunities and a social and supportive workplace culture, can impact employee well-being, offering a range of benefits directly drives the outcomes that worksite employers want.
When employees use 5+ non-medical benefits, they are:
- 24% more likely to be holistically healthy (52% vs. 42%)
- 9% more likely to be engaged at work (75% vs. 69%)
- 10% more likely to stay with their employer by choice (77% vs. 70%)
Employers also recognize the value of benefits to help limit healthcare costs: 77% of worksite employers say benefits are the most cost-effective way to manage employees’ holistic health.
However, 53% of small business employers say their employees are interested in at least one benefit not currently offered by their employer. In particular, worksite co-employees have identified critical illness insurance, hospital indemnity insurance, long-term care insurance, unpaid leave, flexible spending accounts (FSAs) and accident insurance as unmet needs when it comes to benefits.
How PEOs can support worksite employers —and co-employees — with benefits
PEOs play a pivotal role in helping worksite employers curate attractive benefits offerings, as well as empowering co-employees to select and use benefits to enhance their well-being. And, as a result, PEO worksites already outperform their competitors across multiple metrics.
Worksite employers say working with a PEO has:
- Unlocked access to a wider range of benefits than they would be able to offer otherwise
- Increased participation rates in the benefits they offer
- Protected jobs and/or prevented layoffs.
Additionally, 77% of worksite employers say their business has grown faster as a result of working with a PEO, a 15% increase year over year.
However, our research has revealed opportunities for PEOs to further drive outcomes with their employee benefits services:
1. Help worksite employers strategically expand their benefits offerings
While smaller organizations may not have the resources to offer a full spectrum of benefits, PEOs can help worksite employers close the biggest benefits availability gaps — for example, by connecting co-employees to critical illness, hospital indemnity, long-term care and accident insurance.
2. Drive benefits utilization with tailored, omni-channel communications
PEOs play a vital role in crafting effective benefits communications. And they can also help worksite employers remain ahead of employees’ evolving expectations for how they receive communications: For example, through emerging communication channels like videos, podcasts, social media posts and messaging platforms.
3. Clearly connect benefits offerings to organization-wide outcomes, particularly healthcare costs
As small business employers grapple with cost pressures, PEOs can make an impact by clearly communicating how benefits directly boost employees’ well-being — and, as a result, help manage healthcare costs — as well as drive other metrics of financial success, including topline growth.
MetLife’s 2026 PEO Advantage report illuminates a path forward for PEOs and worksite employers
This year’s PEO Advantage report dives deep into how a broad range of benefits drives the outcomes worksite employers want — and boosts co-employee well-being, engagement and loyalty to their employer.
Get the insights you need to communicate the value of benefits to manage healthcare costs, and the steps PEOs can take to support worksite employers. Get the full report.
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