The 12 Questions to Ask Every PEO Before You Sign

Most PEO sales conversations are friendly until the agreement arrives. Then a handful of clauses — fee escalators, plan change rights, exit notice — quietly define what the next three years will feel like. These twelve questions are designed to surface those clauses before the proposal is finalized.

Pricing mechanics (questions 1–4)

• 1. What exactly is included in the PEPM admin fee, and what is billed separately as a pass-through?
• 2. How does the admin fee change at renewal? Is it tied to headcount, payroll volume, or a fixed escalator?
• 3. What benefits are loaded into the rate, and which carriers underwrite them?
• 4. What is the workers comp pricing model — pay-as-you-go, master policy, or a separate carrier placement?

Good answers are specific and written. Vague answers ("it depends") usually mean the cost will rise in ways you can't model. See the PEO cost breakdown for what each line actually represents.

Plan portability and benefits (questions 5–8)

• 5. Do employees keep their deductibles when they join the PEO mid-plan-year?
• 6. Can we choose plan tiers, or is the medical plan a single take-it-or-leave-it option?
• 7. What happens to our 401(k) — does it roll into a PEO master plan, or stay separate?
• 8. If a key employee has an out-of-network specialist, what is the carrier network and accommodation policy?

Exit, liability, and operations (questions 9–12)

• 9. What is the notice period to exit, and what penalties apply mid-term?
• 10. Who owns the employment relationship for unemployment claims, EEOC filings, and audits?
• 11. Are you a Certified PEO with the IRS, and are you ESAC-bonded?
• 12. Who is our day-to-day service contact, and what is the escalation path when they are unavailable?

A PEO that answers all twelve crisply is signaling operational maturity. A PEO that defers more than two of them is signaling something else.