Administrative Services Only (ASO)

Control the costs of an employee benefits plan by self-funding the health and/or dental benefits.


With an Administrative Services Only (or ASO plan), you control the cost of your health and dental benefits, without sacrificing coverage.


With an ASO plan, you pay for employee claims, administration costs for handling those claims, and applicable taxes.

You also manage the risk of your benefits plan. If the claims are lower than expected, you will pay less, or receive a refund, depending on your ASO arrangement. If the claims are more than expected, you will be required to pay for these additional expenses directly.

Differences between
fully insured and ASO

Fully Insured

Consistent, month-to-month costs during the rate guaranteed period

Insurer manages the plan’s risk during rate guaranteed period

Less transparency into rate charges and adjustments

Yearly negotiation may happen with the insurer

No return of premiums if the actual costs of the benefits plan are less than paid premiums

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Administrative Services Only

Greater flexibility in plan design structure and coverage, with the same servicing as insured plans

Pay directly for the costs of the plan, no additional hidden charges

Renewal negotiations are not required

Extra protection and insurance for high-risk costs is available

Must pay all deficits

An unexpected high-cost claim may have a more significant negative impact financially

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Advantages of an ASO

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Lower Costs

By assuming some of the risk, you enjoy lower administrative costs and the elimination of insurance company profit and risk charges.

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Plan Flexibility

Endless possibilities for plan design, including comprehensive choice in covered benefits and exclusions.

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Clear and consistent fee structures and elimination for negotiation of charges with the insurer.

ASO Options

Non-Budgeted ASO

Non-Budgeted ASO arrangement allows for direct billing of claims with no calculated month-to-month premiums other than set cost benefits, such as Travel. In this arrangement, you can expect to provide a security deposit to the insurer to protect against loss of funds for paid claims.

You will need to have a steady cash flow to support the changes each month as funds can fluctuate based on employee claiming activity.

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Budgeted ASO

Budgeted ASO arrangements charge monthly premiums. These premium costs take your previous claiming activity, expected claims, administrative fees, and taxes into consideration.

If claims are less than budgeted, you will receive the funds back at the time of reconciliation. Depending on the surplus, you could receive a lump-sum payment, a credit on your account for future months payments, or could work it back into the budgeted rates.

If claims are more than what was budgeted, you will owe the remainder. Depending on the deficit, you could be required to provide a lump-sum payment or revisit the monthly budgeted rates to collect the deficit amount owed.

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Stop Loss

For an additional cost, you can include stop-loss protection for your ASO Extended Health Care. Stop-loss protection provides you with insurance for expenses above a limit for each individual covered under the benefit plan. We strongly recommend that you include stop-loss to help keep risk exposure controlled.

A $10,000 threshold is typical for stop-loss. With stop-loss, if an employee claimed a $23,000 drug, you would be responsible for $10,000, plus applicable administrative fees. Your insurer will pay the remaining $13,000.

Protect Plus

Specialty drugs are considered drugs that cost over $10,000. These drugs represent the fastest-growing segment for most plan sponsors. In 2014 and 2015, this class of drugs represented approximately 1% of the claims but over 20% of the total drug expenditure. By 2020, the specialty drug class will represent 30% to 50% (based on current projections) of the total drug expenditure for plan sponsors.

As an added feature of the budgeted ASO arrangement, you can choose to add on Formulary Protect Plus. Formulary Protect Plus assists in securing alternative coverage for high-cost specialty drugs, while still covering commonly prescribed drugs under the plan.

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