Health Insurance - does buying into an umbrella policy make your staff co-employees

The statewide nonprofit I direct has bought into a pool/umbrella health insurance with our national affiliate organization. As the statewide nonprofit we are a separate 501c(3). We also pay the national affiliate to do our payroll. Otherwise, we are completely separate financially, governance, etc. The national affiliate is now claiming that our (state) staff must be deemed co-employees of the national affiliate, and that if we go out on our own to buy insurance and payroll services elsewhere, the new provider would also require us to list our staff as co-employees. Does anyone have experience with this?

David,
It sounds like your org has an agreement with a professional employer organization (PEO). Assuming so, it does create a co-employee arrangement where your org handles the hiring, managing, and termination of employees but the PEO handles the administrative tasks of payroll, HR & compliance, paying taxes, etc. Each PEO is different, but in general larger providers are able to use their purchasing power of a large pool of co-employees to purchase healthcare plans, disability insurance, retirement plans, worksite benefits, dependent care, commuter benefits, etc.

Assuming that is what your national organization is using and that you are subsequently part of, it makes sense that you’d list them as co-employees. It doesn’t affect your 501c3 status, and again, you retain all responsibility of running the business.

I found these two articles helpful:
Forbes: www.forbes.com/advisor/business/what-is-peo
ADP: https://www.adp.com/resources/articles-and-insights/articles/p/peo-what-is-a-peo-professional-employer-organization.aspx

Thank you, MichaelMNA. That does sound like my situation. I’ll check out the articles. Cheers.