Administrative Services Only (ASO) Employee Benefits
- Annual Refund Potential
- Claim Transparency
- Cost Management
Key Benefits
Choose between paying a flat monthly premium or paying based on processed claims for tailored financial management
Customize your coverage to include essential services like drugs, dental, and paramedical options, with the choice to exclude insurance coverages.
With self-insurance, businesses only pay for actual claims rather than fixed premiums, potentially reducing costs.
What is a ASO plan
An ASO (Administrative Services Only) plan is an arrangement where a company self-funds its employee benefits program, such as drugs, dental & parameds, while purchasing only the administrative services from an insurer. This self-funded approach means the employer assumes the financial risk of claims, including catastrophic or higher-than-anticipated costs, instead of transferring that risk to an insurer.
Questions on Your Mind?
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Comparison Chart
| Traditional | ASO | Hybrid | |
|---|---|---|---|
| Cost Predictability | |||
| Cost Predictability | Fixed premiums, predictable costs. | Variable costs based on claims. | Mix of fixed premiums and variable costs. |
| Financial Risk | |||
| Financial Risk | Low, insurer covers claims. | Highest, employer covers claims. | Shared, with capped risk. |
| Plan Flexibility | |||
| Plan Flexibility | Limited, insurer-defined | High, customizable options | Moderate, with flexible HSA |
| Administration | |||
| Administration | Minimal employer involvement. | Higher, employer-managed claims. | Moderate, mix of insured and HCSA options. |
| Best suited for | |||
| Best suited for | Small to Mid | Mid to large | All |
| Renewal Process | |||
| Renewal Process | At times unpredictable | Mid transparency | Could provide highest control over rates |
Best Suited For
Large businesses or those with a stable workforce, financial resources to manage claims variability, and a higher tolerance for risk. This plan is ideal for companies seeking greater insight into their benefits and are prepared to handle the potential unpredictability in claims costs
ASO benefit packages include
Drugs
Antibiotics, narcotics, creams, etc.
Treatment
Teeth cleaning, braces, crowns, etc.
Expenses
Physiotherapy, massage therapists, chiropractic care, etc
Care
Glasses, contact lenses, eye exams, etc.
Equipment
Crutches, nebulizers, CPAP machines, etc.
Medical
Emergency medical expenses
Spending Account
Flexible allowance for additional health-related needs
Coverage
Disability Insurance, Term & Permanent Life Insurance
Upgrades
Semi-private or private rooms
Custom orthopedic shoes and compression socks, etc.
Why is a group plan important
Implementing a group benefit plan is crucial for attracting and retaining top talent. It demonstrates a company’s commitment to employee well-being, enhances job satisfaction, andfosters loyalty. Additionally, such plans can improve productivity by ensuring employees have access to essential health services, reducing absenteeism.
Offering comprehensive benefits also positions the company as competitive in the job market, helping to build a positive workplace culture. Overall, a well-structured group benefit plan contributes to a healthier, more engaged workforce.
FAQ
What is stop-loss insurance in an ASO plan?
Stop-loss insurance is designed to limit the financial risk for employers in an ASO plan. It provides protection against extremely high claims by setting a cap on the amount the employer will pay for individual claims or overall plan expenses. If claims exceed the predetermined thresholds, the stop-loss insurer covers the excess costs.
What are the main financial benefits of choosing an ASO plan?
Employers can save money if employee claims are lower than expected since they are only paying for the actual claims incurred rather than fixed premiums. There’s also more control over cash flow and the potential for surplus savings.
What types of expenses and benefits can be covered under an ASO plan?
ASO plans can cover similar benefits to traditional plans, such as health, dental, and vision. However, they offer more flexibility in customizing the specific coverage and expense limits.
What administrative responsibilities does an employer have with an ASO plan?
Employers need to ensure timely funding for claims and manage cash flow. The carrier handles processing claims, customer service, and compliance, but the employer oversees financial oversight and plan customization.
What are the advantages and disadvantages of an ASO plan?
Advantages: ASO plans offer greater flexibility and cost control because the employer only pays for actual claims, potentially saving money if claims are lower than expected. It also allows for more customization of the benefits plan.
Disadvantages: Since the employer assumes financial risk, the cost can be unpredictable, particularly if claims are higher than anticipated. Managing the financial aspect and ensuring adequate cash flow can be challenging without proper planning.