What is a Health Insurance Master Plan?

Doctor holding clipboard to showcase the benefits of a health insurance master plan

Written by Blake Odom

President & COO

Applied Business Solutions

December 4, 2018

In 2018, the average annual premium of employer-based family coverage rose 5% and is expected to do the same next year. Many businesses struggle to provide their employees the health benefits necessary to stay competitive in a tight labor market, but there is a solution. A health insurance master plan can keep costs down without sacrificing care options or increasing employee deductibles.


A client-sponsored plan is one where the employer has selected a health insurance provider and employees can choose various levels of coverage from that provider. In contrast, a health insurance master plan allows Professional Employer Organizations (PEOs) to combine all of the employees it serves under one large umbrella. The employees continue to be individually underwritten or covered by their own company’s plan, but they are pooled with other PEO-represented companies for underwriting purposes.


Simply stated, a master plan saves employers and employees money because they are now part of a larger pool of people. The insurance plan is less expensive to administer, resulting in lower premiums. At Applied Business Solutions we utilize a Florida Blue Cross/Blue Shield health insurance plan, which allows us to enroll people in our PEO immediately, and they experience lower costs on health benefits from day one. Our clients’ savings can be significant, often partially or fully offsetting the cost of their human resources, payroll and tax compliant PEO services.


The key to a master plan is pooling employers to give the same underwriting leverage as larger companies. This benefits our clients by:

  • Allowing smaller companies to offer health care benefits. Cost is the primary barrier to providing this coverage to employees, but with a master plan, a 10 person company can now look like a 200 person company by the underwriters, and the price drops to an affordable level.
  • Retaining key employees. Providing healthcare insurance to existing employees demonstrates the company’s commitment to them and often results in employee loyalty. They will no longer yearn for another position with companies that do have this benefit, thereby retaining staff and lowering the cost of onboarding new people.
  • Attracting higher quality employees. By adding healthcare coverage to the employee benefits package, the company can now bring in people with more experience and skills than they could before, which helps grow their business. Our clients can better compete for the talent they need because the benefits playing field is leveled.
  • Making healthcare insurance affordable. Everyone, from the employer to their employees, will save money. This difference means more money in the paycheck for the staff and improved cash flow for the business.

A health insurance master plan can change your entire benefits landscape, save you money, and be a critical piece in retaining and attracting the right employees. Contact us today to learn more about our PEO services and how much money you could save with a master plan.

What is Human Capital Management?

Human capital management (HCM) provides an overall strategy to hiring the right talent, managing performance and optimizing productivity.

Have a question? Our leadership team is here to help. Contact us today.

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Applied Business Solutions has 75+ years of combined Payroll, Insurance and Human Resources experience with companies ranging from 1 to 2,500 employees.