PEO vs. Broker: Which One Makes Sense for Your Business?

So, you’re growing your business, hiring people, and now facing the health insurance puzzle. You’ve probably come across terms like PEO, co-employment, and ACA compliance, and you’re wondering—how did this get so complicated?

Trust me, I get it. So let’s break down the difference between PEOs and brokers, what they cost, and how to avoid locking yourself into something that ends up costing way more than it should.

First—Do You Have to Offer Health Insurance?

Here’s the deal:

👉 If you have 50+ full-time employees (or equivalent part-timers), you legally have to offer health insurance under the Affordable Care Act (ACA).

👉 If you’re under 50? It’s optional. But if you want to keep good people, you’ll probably offer something.

Okay, now onto your options.

Option 1: Broker — More Control, More Flexibility

Think of a broker like a personal shopper for health insurance. They help you pick a plan from the open market that fits your business.

Pros:

✅ You own the policy—full control, easy to switch plans.

✅ No extra admin fees—just the cost of the insurance.

✅ Good brokers handle the legwork (shopping plans, enrollment).

✅ Scales better if you grow past 50 employees.

Cons:

❌ Higher rates upfront—small teams don’t get big-group discounts.

❌ You’ll manage HR, payroll, and compliance separately.

❌ Not all brokers are great—some will ghost you after the sale.

If you want control and lower long-term costs, this is usually the way to go.

Option 2: PEO — Hands-Off, but at a Price

A PEO (Professional Employer Organization) bundles HR, payroll, benefits, and compliance. But here’s what makes them different: co-employment.

Your employees are technically under the PEO’s tax ID—not yours.

Why that matters:

1️⃣ They take on some liability—like payroll tax issues.

2️⃣ They handle compliance—multi-state headaches, solved.

3️⃣ You get access to big-company insurance plans—sometimes cheaper rates.

But…

❌ You don’t own the policy. If you use their plan, it’s tied to them.

❌ It’s not always cheaper. Fees can add up fast, especially if you bring your own insurance plan.

❌ Getting out is complicated. You can’t just leave overnight.

➡️ Pro tip: Some PEOs now let you bring your own insurance plan—best of both worlds if you pick right.

So, Which One’s Right for You?

Ask yourself:

1️⃣ Do I want hands-off HR and benefits? → PEO

2️⃣ Do I want control and lower long-term costs? → Broker

3️⃣ Am I okay paying extra for convenience? → PEO

4️⃣ Do I want to build a scalable benefits strategy? → Broker

5️⃣ Want a hybrid option? → PEO that lets you bring your own plan

💡 And remember—if you’re over 50 employees, you must offer health insurance, so choose something that keeps you compliant.

Final Thought — Don’t Lock Yourself Into the Wrong Thing

At The Shiftly, I help businesses figure this out all the time. Some companies save tens of thousands by switching from a PEO to a broker. Others need a PEO because they don’t have HR set up and are one mistake away from a compliance mess.

If you’re stuck deciding, let’s chat. Shoot us an email or book that 15 minute consultation. Better to make the right call now than regret it next year.

Want more no-BS HR and benefits advice? Follow along—this is what we do.