Payroll Service Pricing: Per Process vs Per Employee Per Month PEPM

In the per-process payroll model, your business is billed based on the number of employees paid each time payroll is processed. Invoices are typically generated automatically when payroll is run, meaning fees are applied only when employees receive checks. Learn how the transition to a PEPM benefits model could reduce healthcare costs, increase employee engagement and mitigate risk for your company. what is pepm An advantage to the programs listed above is they can also be packaged together and used as a hiring benefit to attract and retain top talent. Combine mental health, weight loss and smoking cessation to form a “Health and Wellness” program that prioritizes and supports the health and fitness of employees.

Above The Line, Below The Line Financial Concept

• These can include vision loss, nerve damage, chronic kidney disease and even cancer.
• A proprietary, fee-based procurement website that summarizes benchmark pricing for purchasing agents revealed that the PEPM fee for comprehensive EAP services in 2018 was $1.08.
• Per Employee Per Month refers to a payment structure where employers contribute a fixed amount for each employee’s insurance coverage every month.
• If the title of this post caught your eye, you are likely in the employee health benefits space.
• Invoices are typically generated automatically when payroll is run, meaning fees are applied only when employees receive checks.
• The company pays out-of-pocket for their employees healthcare expenses as they are incurred.
• Currently, an average utilization rate, nationally, among employees who have access to a telehealth policy is only 7%.

In this way, access to high-quality, low-cost health care is becoming a reality, which resonates with the values of the wellness industry. If full utilization of 20 visits under the PEPM structure is achieved, an employer would be paying $420 per telehealth consult. Currently, an average utilization rate, nationally, among employees who have access to a telehealth policy is only 7%. At this level of engagement the cost per consult paid by the employer climbs to an incredible $1,200 per consult. In the realm of Human Resources, technological advancements have brought forth an array of tools that greatly simplify processes and operations.

Research, survey and compile employee data

These older models tend to lump a predetermined set of benefits together without thinking of the individual employee, many of whom will never utilize the benefits. In the evolving landscape of employee benefits, businesses are turning to innovative solutions to ensure the well-being of their workforce. According to Mark Cuban, Billionaire entrepreneur and co-founder of Cost Plus Drugs, businesses are bleeding money from their less than superb healthcare benefit plans. The cost per transaction model may not be as suitable for businesses experiencing growth or fluctuations in their workforce.

Why Did Companies Switch from Cost Per Transaction to PEPM?

Key terms must be properly defined to provide a level field in the evaluation process. The cost per transaction model can get a little tricky when it comes to making adjustments in employee paychecks. For example, if an employee needs two checks in a month, the employer will have to pay twice. Break down the PEPM benefits model, highlight its perks and show how it lines up with your company’s commitment to their well-being.

• These additional charges can quickly add up and lead to higher overall costs than initially anticipated.
• An employer with 2,000 + employees was paying around $0.96 PEPM – a smaller employer with roughly employees around $1.58 PEPM.
• Learn how to successfully launch a PEPM benefit program so you know what to expect before implementation.
• Its unique business model supports the next-generation telemedicine services, which are becoming a very popular benefit as shown by a survey among U.S. employers .
• Research online reviews, ask for recommendations, and assess the provider’s experience in the industry.

How to Protect Your Payroll from Bank Holiday Delays

For instance, the PEPM model offers greater customization and may boost employee satisfaction, but without appropriate support services, employers risk paying for something people don’t use. On the other hand, the PMPM model may encourage physicians to prioritize patient outcomes but may also lead to deferring necessary health services to save money. Capitation models, like PMPM, prioritize preventative care and discourage unnecessary treatment.

Or create a chronic care management package that includes diabetes management and heart disease. 1 in 4 or about 26% of Americans 18 years and older suffer from some type of mental health disorder, and it’s only been trending up in recent years. Often, these patients suffer from multiple mental health disorders, like depression and substance use, at once. Offering mental health support through benefits programs could increase access to much needed services and support a healthier, more productive workforce in the long run.

Diabetes

However, it’s crucial to understand that PEPM rates might appear lower but are typically set at a higher rate since they’re calculated over the entire month. For businesses that have a varying number of pay periods each month or experience frequent workforce changes, this model can be more cost-effective. Regardless of how often you process payroll or any other HRIS functions, your monthly fee remains consistent. This consistency aids in budget planning, especially for companies with a relatively stable workforce.

No one likes paperwork, and while we can’t get rid of it entirely, PEPM may help lessen the burden. Administrative efficiency is a key component for HR teams managing employee benefits. The streamlined nature of the PEPM model simplifies administrative processes, including billing and paperwork. This efficiency translates to time savings for HR professionals, allowing them to focus on strategic initiatives rather than being bogged down by administrative complexities. This payment model centers around customizing benefits based on individual employee needs rather than as a collective unit. The PEPM approach aims to offer greater flexibility and options that reflect the miscellaneous needs of a workforce.