AI IS HERE: ARE PEOS READY FOR THE NEXT ERA OF HEALTH BENEFITS?

Health benefits are getting harder to manage—and more expensive. As employers grow frustrated with rising premiums and rigid insurance models, many are turning to PEOs for a better way forward. In response, PEOs are expanding their offerings, bundling in health plans with flexibility, savings, and support for growing businesses.

But with that opportunity comes exposure.

For PEOs sponsoring self-funded health plans or operating Multiple Employer Welfare Arrangements (MEWAs), the stakes are high. These models offer greater control and margin potential—but they also transfer financial risk to the PEO. Every claim filed, every member misunderstanding, and every out-of-network surprise bill hits closer to home.

It’s no longer enough to administer benefits. PEOs must own performance—which means controlling utilization, minimizing leakage, and engaging members in real time. In this environment, AI isn’t futuristic. It’s foundational.

THE SELF-FUNDED BALANCING ACT

When you hold the financial risk, it’s not the catastrophic claims that wear you down—it’s the accumulation of small, preventable costs. A member chooses the wrong site of care. A high-cost provider goes unchecked. A bill gets ignored because the EOB didn’t make sense. These are the margins you lose silently, one interaction at a time.

And they’re not solved with more education or longer PDFs. PEOs need real-time, embedded infrastructure that nudges members toward better decisions as they navigate care—not after the claim hits. Without that kind of proactive engagement, managing cost becomes guesswork.

THE COST OF CONFUSION

Member confusion is expensive. A lack of clarity around coverage, providers, and billing can result in:

• Unnecessary procedures at high-cost facilities
• Delayed care that leads to worse outcomes
• High call volumes that drain internal teams

In self-funded arrangements, these aren’t just operational inefficiencies—they’re direct financial liabilities. PEOs can’t afford to treat service as a call center function. It must be reframed as a cost-containment strategy.

HOW AI CHANGES THE ECONOMICS

Artificial intelligence offers a new model for supporting members and managing plan risk. Not as a bolt-on chatbot or flashy gimmick, but as an integrated engine that drives every interaction—proactively and intelligently.

Here’s where AI is reshaping the economics for risk-bearing PEOs:

1. Real-Time Member Support. AI-powered voice and chat agents resolve routine questions 24/7—without adding headcount. They can guide members through coverage, costs, and next steps with consistent accuracy. That translates into fewer calls, faster resolution, and less strain on your team. More importantly, it keeps members in-network and on-plan—before small issues become big claims.

2. Smarter Navigation, Lower Spend. AI-driven cost comparison tools allow members to search for providers, estimate out-of-pocket costs, and choose high-value care based on their exact benefits and location. When members understand their options, they make smarter choices. And when they do, you pay less.

3. Streamlined Prior Authorizations. AI automates and accelerates the PA process, identifying low-risk requests for instant approval and flagging those that need attention. By reducing delays and friction for both members and providers, PEOs can reduce unnecessary escalations, avoid care abandonment, and lower overall costs.

4. Proactive, Personalized Advocacy. Traditional advocacy is resource-intensive—and often reserved for high-dollar claimants. AI flips that model, offering personalized prompts, plan guidance, and preventive care reminders across your entire population. It’s scalable care navigation that works behind the scenes, improving outcomes without increasing overhead.

5. Back-End Automation and Visibility. AI can also streamline administrative processes—eligibility, billing reconciliation, error detection—while surfacing real-time insights on plan performance across your client base. That means fewer manual touchpoints and clearer visibility into what’s driving costs.

PEOS AT A CROSSROADS

PEOs are uniquely positioned right now. As employers move away from traditional insurance models, they’re looking for something better—something more flexible, more transparent, and more supportive for their teams. That puts PEOs in the driver’s seat.

Offering self-funded and MEWA-based plans gives PEOs the chance to deepen client relationships and build long-term value. But growth brings complexity—and with it, risk.

That’s where AI comes in. Not as an overlay, but as core infrastructure. The right AI-powered systems can automate the manual, reduce claim leakage, surface real-time insights, and support every member without overloading your team. It’s how you scale high-touch service without scaling cost. And it’s how you confidently expand your offerings while keeping risk in check.

This isn’t just about cutting costs or streamlining operations. It’s about equipping your business to grow—smarter, faster, and with more control.

The future favors the PEOs that move first. Not just to meet the moment—but to lead it.