Start with the number you are actually comparing
A PEO invoice contains wages, payroll taxes, workers' comp, a service fee and premiums. When people compare PEOs they compare service fees, and the service fee is almost never the largest number. On a 25-person team buying single coverage at the 2025 average premium of $777 a month, the premium bill alone is $233,100 a year, and the $37,200 fee sits on top of it. The fee is 16% of the premium, not the other way round.
That framing matters because it points at the right question. The alternative to a PEO is not always a cheaper fee. Sometimes it is a better plan rate, a simpler structure, or keeping the PEO for HR support and moving only the health plan. All three are worth costing before you renew.
| Product | Listed price | Health benefits |
|---|---|---|
| Payroll | $8 per employee per month plus $50 base | Add-on |
| PEO Basic | $79 per employee per month, premiums extra | No medical administration |
| PEO Plus | $124 per employee per month, premiums extra | Medical, dental and vision administration |
| Reimbursement add-on | $25 per enrolled employee per month | ICHRA through Thatch |
1 to 3: cheaper PEOs and unbundled payroll
The first alternative is a PEO with a lower service fee. Rippling PEO quotes individually and does not publish a rate, which makes it hard to compare, and in the quotes I see it lands in a similar range to Justworks. TriNet and Insperity quote individually too. The cheaper end of the market exists, and it is mostly regional PEOs and payroll providers selling insurance access without much HR depth.
The second is unbundling. Keep payroll software at a few dollars per employee, buy workers' comp directly, and buy the health plan separately. On the 25-person example that is roughly $3,000 for payroll plus the cost of workers' comp and the plan, against $37,200 for the PEO service fee. The gap is real, and the work it transfers back to you is real too: tax registrations in new states, annual workers' comp audits, and somebody to answer an HR question.
The third is a payroll-plus-broker combination, which is what most companies eventually land on. A payroll platform handles pay, a broker places coverage, and the company buys advice by the hour or as part of the commission. It is less polished than a PEO and it costs less, and for a company with an operations lead it is usually the better trade.
One thing to check in any PEO comparison: state unemployment insurance. In some states a PEO bills SUI at its own experience rate rather than yours, which can be better or worse than what you would pay alone. It never appears in the headline fee, and it can move the answer.
4: a group plan on its own, without co-employment
The alternative that changes the structure rather than the vendor is buying a group health plan directly. No PEO, no co-employment, no service fee per head. The company holds the policy, the insurer holds the risk, and the cost is one monthly premium in a quote.
The saving is straightforward to model. On the same 25-person team, the PEO fee of $37,200 disappears and the premium is priced on its own. If the standalone plan comes in at a similar rate to the PEO's plans, the entire service fee is the saving, minus whatever workers' comp and HR support you now buy separately. In my experience the standalone plan is usually not more expensive, because PEO plans are pooled and the pooling does not always beat a well-priced group plan.
What you give up is the bundle: the compliance help, the workers' comp access, the employment practices liability cover and somebody to call when a manager has a problem. For a company with 25 employees and an operations person, that is often worth less than $37,200 a year. For a company hiring in four states with no HR function, it can be worth more.
There is a middle version of this that a lot of companies miss. Keep Justworks for payroll, which is $8 per employee per month, and move only the health plan off the PEO. You keep the software and the tax filings, you lose the co-employment, and you keep most of the fee. It is the sequencing I would recommend to anyone who is happy with the product and unhappy with the invoice.
5 to 7: ICHRA, a broker, and doing nothing
An ICHRA is the fifth route and the one that fits a distributed, young team best. Instead of a group plan, the company funds a monthly allowance that employees use to buy individual coverage. Administration runs from about $20 to $45 per employee per month, and Justworks itself resells Thatch's ICHRA at $25 per enrolled employee. For a team of 25 spread across many states, this can be the cheapest structure available, and for a team with parents it usually is not.
A broker is the sixth. A good one will put a PEO quote, a group plan quote and an ICHRA quote on the same page for the same census, which is exactly the comparison you want and rarely the one you get. Ask for its compensation in dollars and for any carrier-contingent component.
The seventh is staying. Justworks is a genuinely good product: the software works, the support is real, and the published pricing is a mark of confidence most PEOs do not have. If the bundle is earning its fee, leave it alone. The mistake is renewing without costing the alternative, not renewing.
The comparison to run before your renewal
Ask for the renewal terms 120 days before the date. Then build three columns: the PEO renewal as quoted, Justworks payroll plus a standalone group plan, and a standalone group plan with your own payroll. Put the premiums, the fees, workers' comp and expected SUI in each column. The column that wins is the one you should take, and the exercise takes an afternoon.
Include the exit cost. Leaving a PEO means registering state tax accounts, buying your own workers' comp and moving a 401(k) if the PEO holds it. It is a project, not a click, and it is the reason most companies stay a year longer than they should.
And check the plans before the fee. A cheap fee on top of a plan with a $4,000 deductible is worse than a higher fee on a plan employees can use. Our guide to Justworks pricing walks the worked totals by headcount, and is Justworks PEO worth it? covers the crossover point.
What to ask any Justworks alternative
- What is the total annual cost, including fees, premiums, workers' comp and SUI, in dollars?
- What is the service fee per employee per month, and does it apply to employees who waive coverage?
- Which state tax accounts do you handle, and which do I keep?
- Is workers' comp at your experience rate or mine?
- What is the notice period, and what does an exit cost in time?
- Can I keep your software and move only the health plan?
- What are the plan deductibles, out-of-pocket maximums and networks by tier?
Who should stay on Justworks, and who should leave
| Your company | The right move |
|---|---|
| Five people, first hires, no HR | Stay. The bundle is worth the fee at that size |
| 25 people with an operations lead | Cost payroll plus a group plan |
| Hiring in four states with no HR function | Stay, or move to a national PEO |
| A team that already has payroll elsewhere | A group plan without the PEO fee |
| A distributed, young, single team | Price an ICHRA before deciding |
Justworks is a good company selling a real product at a published price. That last part is unusual and it deserves credit. But $124 per employee per month is a lot to pay for a bundle a 25-person company can assemble for less, and the only way to know which side of that line you are on is to run the three columns.
Compare a standalone plan with the full Justworks renewal
Use the same census and effective date. Add the services you would need to replace, then compare the written medical benefits, employer cost and employee contributions.
