# PEO cost calculator

Source: https://www.getprescience.com/tools/peo-cost-calculator
Author: Rishab Jain, Cofounder and CEO, Prescience
Published: 2026-11-07
Updated: 2026-11-07
Cite as: Rishab Jain. "PEO cost calculator." Prescience, November 7, 2026. https://www.getprescience.com/tools/peo-cost-calculator

A professional employer organization (PEO) bundles payroll, HR, compliance and access to group benefits for a fee per employee per month. Justworks, one of the few PEOs that publishes prices, lists PEO Plus at $124 per employee per month in October 2026: $14,880 a year for 10 people before anyone's health premium. Enter your PEO's fee and the cost of the tools you'd use instead to see what the bundle costs you.

- **Justworks PEO Basic / Plus:** $79 / $124 per employee per month
- **Justworks Payroll (no PEO):** $8 per employee + $50 a month
- **10 people on PEO Plus:** $14,880 a year in fees
- **Premiums:** Billed on top of PEO fees

## Compare PEO fees with going direct

_Interactive calculator: open the page in a browser to use it. The rules and figures it applies follow._

The defaults use Justworks' published October 2026 prices for PEO Plus and its non-PEO payroll product, plus an illustrative $8 per employee per month for benefits administration. Replace them with your own quotes. Add anything the PEO covers that you'd otherwise pay for separately, like an HR advisory service, a workers' comp policy or compliance software, under other yearly costs.

## What a PEO's fee covers, and what it doesn't

**Typical PEO cost components**

| Cost | In the PEO fee? | Notes |
| --- | --- | --- |
| Payroll processing and tax filing | Yes | Filed under the PEO's tax ID |
| HR support and compliance help | Yes | Depth varies by tier |
| Workers' comp | Often access only | Premium may be billed separately or as a % of payroll |
| Health, dental and vision premiums | No | Billed at the PEO's rates on top of the fee |
| Employer payroll taxes | No | Passed through at cost |
| Add-ons (time tracking, international, 401(k)) | Sometimes | Extra per-employee fees |

Some PEOs charge a percentage of payroll instead of a flat fee, commonly a few percent of gross wages. For a well-paid team, that can cost far more than a flat fee: 3% of a $120,000 average salary is $300 per employee per month. If your quote is a percentage, convert it to dollars per employee per month before comparing.

## Worked examples

**A 10-person team on Justworks PEO Plus**

Illustrative. Fees at Justworks' October 2026 list prices, compared with Justworks Payroll plus $8 per employee per month for benefits administration.

- PEO Plus: 10 × $124 × 12 = $14,880
- Payroll: (10 × $8 + $50) × 12 = $1,560
- Benefits administration: 10 × $8 × 12 = $960
- Difference: $12,360 a year ($1,236 per employee)

**About $12,400 a year for the bundle.** What you get for it is co-employment: compliance help, HR advice, and access to the PEO's benefits.

**The same comparison at 25 people**

Illustrative. The same prices for a 25-person team.

- PEO Plus: $37,200
- Payroll and benefits administration: $5,400
- Difference: $31,800 a year

**The gap grows with headcount.** Most companies I talk to start questioning the PEO between 20 and 50 employees.

## The bigger cost: health premiums

For most teams, the PEO fee isn't the biggest number. Health premiums usually are, and they're billed at the PEO's rates. PEO plans can be a good deal for very small groups that wouldn't get group pricing on their own, and a poor one for groups that could do better on their own. A 25-person team at KFF's 2025 average single premium spends about $233,000 a year on medical coverage; a 10% difference in premium is worth more than half the PEO fee.

PEO renewals also tend to rise faster than the fee. Our guide to [PEO renewal increases](https://www.getprescience.com/guides/peo-renewal-increase) covers why, and [PEO health insurance rates](https://www.getprescience.com/guides/peo-health-insurance-rates) explains how they're set.

## Converting a percentage-of-payroll quote

To compare a percentage quote with a flat fee, multiply the rate by your average monthly pay per employee. The same rate costs very different amounts at different salaries.

**A 3% of payroll PEO quote**

Illustrative. A PEO quotes 3% of gross wages to two 15-person companies: one with an average salary of $55,000, the other $140,000.

- $55,000 average: $55,000 ÷ 12 × 3% = $137.50 per employee per month
- $140,000 average: $140,000 ÷ 12 × 3% = $350 per employee per month
- Annual fee, $140,000 team: 15 × $350 × 12 = $63,000

**For a well-paid team, the same 3% is two and a half times the cost.** It also rises with every raise. Ask for a flat per-employee fee if your pay is above average.

## Costs that don't show up in the headline fee

- **Benefits markups.** Some PEOs add a margin to health premiums or charge a separate benefits administration fee. Ask for the carrier's rate and the PEO's charge separately.
- **Workers' comp markups.** When workers' comp is bundled, the rate you pay may be higher than a policy you'd buy alone.
- **State unemployment rates.** Some PEOs report unemployment tax under their own account, at their rate rather than yours, which can be higher or lower.
- **Minimums and setup fees.** Monthly minimums can make a PEO expensive for very small teams.
- **Exit costs.** Termination notice periods, final-month fees and the payroll tax reset if you leave a non-certified PEO mid-year.

## How to get a quote you can compare

1. **Send the same census to every PEO** Employees, salaries, states, ages and current enrollment by tier.
2. **Ask for fees and premiums separately** A single all-in number per employee makes it impossible to see what you're paying for administration.
3. **Get the full benefits rate sheet** Rates for every plan and tier, the renewal date and any rate guarantee.
4. **Ask about renewals** How did the PEO's health rates change at the last two renewals? Fees are usually stable; premiums are where costs move.
5. **Price the unbundled alternative** A payroll provider, a benefits plan bought directly and any HR help you need. Enter both in the calculator above.

**Compare the PEO model with a census-based proposal**

Use the same employees, family tiers and effective date, then keep replacement HR and payroll costs in the comparison. The calculator's assumed premium is not the written quote for your group.

[Compare my PEO costs](https://www.getprescience.com/quote)

[Prepare the employee census](https://www.getprescience.com/integrations)

[Download the census CSV template](https://www.getprescience.com/api/employer/census-intake/template)

## PEOs and multi-state teams

One of the strongest reasons to use a PEO is hiring in many states at once. Each new state means registering for payroll withholding and unemployment tax, and often a state-specific benefits or leave rule. A PEO handles the registrations under its own accounts. If you leave, you'll need your own registrations in each state, which takes a few weeks to set up.

Benefits are the other multi-state problem. A small group plan is usually based in one state, and its network may be thin elsewhere. That's often what keeps remote teams in a PEO. An ICHRA solves it differently: each employee buys an individual plan where they live, with an allowance from the company. Our guide to [health insurance for remote employees](https://www.getprescience.com/guides/health-insurance-for-remote-employees) compares the options. Many teams that leave a PEO keep a modern payroll provider for the multi-state tax work and move benefits to an ICHRA, which separates the two decisions and lets each one be priced on its own.

> **Prescience Choice: ICHRA for $20 per enrolled employee per month.** Choice works in all 50 states and DC without co-employment, so a remote team can leave the PEO and keep coverage where each person lives.
> - **You set a monthly allowance;** each employee picks and owns an individual plan
> - **$20 per enrolled employee per month,** with no setup or platform fee
> - **Works in all 50 states and DC,** so remote and multi-state teams fit
> - **Plan comparison, enrollment help and Crystal,** our assistant for benefits questions
> Best for small teams, teams in several states, and anyone pricing ICHRA. [Get a Choice quote](https://www.getprescience.com/employer/choice)

## When a PEO is worth it

- **Worth it:** very small teams with no HR person, companies hiring in many states at once, and businesses in high-risk industries that need workers' comp they can't easily buy alone.
- **Worth questioning:** teams of 20 or more, teams with an HR or operations lead, and companies whose health renewals have jumped.
- **Watch the exit:** leaving a PEO mid-year resets payroll tax wage bases unless the PEO is IRS-certified, and benefits have to be replaced on the same day. Plan the switch for January 1 or your renewal date.

For the full decision, see [is a PEO worth it](https://www.getprescience.com/guides/is-a-peo-worth-it) and [how to leave a PEO](https://www.getprescience.com/guides/how-to-leave-a-peo).

## Leaving a PEO with Prescience

Most companies that leave a PEO keep a payroll provider and replace the benefits. That's the part we handle: Diamond as a group plan, or Choice as an ICHRA, set up to start on the day your PEO coverage ends.

> **Prescience Diamond: A company health plan with an effective $0 deductible.** Diamond replaces PEO health coverage with a group plan priced on its own, usually 10–20% below comparable fully insured coverage.
> - **An effective $0 deductible** and simple copays shown before a visit
> - **A broad national PPO network,** plus providers we contract with directly
> - **24/7 physician-led care navigation** that books visits and explains costs
> - **Usually 10–20% below comparable fully insured coverage,** fixed in your quote, with no admin fees
> Best for teams of about 15 or more that want one great group plan. [Get a Diamond quote](https://www.getprescience.com/get-started?p=Employer&product=diamond)

## Frequently asked questions

**How much does a PEO cost?**

Most PEOs quote privately. Justworks, one of the few that publishes prices, lists PEO Basic at $79 and PEO Plus at $124 per employee per month in October 2026. Percentage-of-payroll PEOs charge a share of gross wages. Health premiums are billed on top.

**Is a PEO cheaper than doing payroll and benefits yourself?**

In fees, rarely. Payroll software costs far less than a PEO fee. A PEO can still be worth it if it saves you an HR hire or gets you better benefits or workers' comp than you could buy alone.

**Do PEO fees include health insurance?**

No. The fee covers administration. Health, dental and vision premiums are billed separately at the PEO's rates.

**What is PEPM?**

Per employee per month, the most common way PEO and benefits administration fees are quoted. Multiply by employees and 12 for the annual cost.

**When should a company leave its PEO?**

Usually at 20 to 50 employees, when the fee and premiums outweigh the HR help. The best time is at the PEO health plan's renewal or January 1.

**Will leaving a PEO reset payroll taxes?**

It can. Leaving a non-certified PEO mid-year can restart Social Security and unemployment wage bases. Leaving a certified PEO (CPEO) generally doesn't.

## Sources

- [Justworks, pricing (checked October 2026)](https://www.justworks.com/pricing)
- [IRS, Active certified professional employer organizations](https://www.irs.gov/pub/irs-sbse/active-cpeos.pdf)
- [26 CFR 31.3511-1, CPEO successor rules](https://www.ecfr.gov/current/title-26/chapter-I/subchapter-C/part-31/subpart-F/section-31.3511-1)
- [U.S. Chamber of Commerce, PEOs vs. insurance brokers](https://www.uschamber.com/co/run/human-resources/peos-vs-insurance-brokers)
- [KFF, 2025 Employer Health Benefits Survey](https://www.kff.org/health-costs/2025-employer-health-benefits-survey/)