In a traditional benefits plan, employers pay a set monthly premium and receive an annual renewal at the end of their benefit year, where premiums increase or decrease based on usage. Because employers pay a set amount throughout the year regardless of usage, they’re sometimes paying for benefits that are being underutilized (or not utilized at all), leading some to wonder, “Is there a better way for me?”
Administrative Services Only (ASO) is that better way! ASO plans are a benefits solution that is growing in popularity as Insurers, Advisors, and employers continue to explore the merits of a self-insured arrangement.
But what is an ASO and how can an employer know if it’s the right choice for them?
Let’s find out!
What is an ASO plan?
Administrative Services Only (ASO) benefits plans are a self-insured1 solution for employers. With an ASO plan, an employer pays only for employee’s eligible health and dental claims*, up to a stop-loss2 threshold. ASO plans allow employers to pay only for what gets used throughout the year and not for benefits that aren’t being fully utilized, as may be the case with a fully-insured3 plan.
*plus any applicable administrative fees, commissions and taxes.
- Self-insured – Employers take on the risk of providing benefits to employees, rather than the Insurer, but pay only for actual claims made instead of a standard premium.
- Stop-Loss – Protects the plan in the event claims exceeds a specified threshold. Claims made beyond the Stop-Loss threshold do not affect the group’s experience and are not payable by the employer.
- Fully-insured – Insurers take on the risk of providing benefits to employees, with employers paying a fixed premium (regardless of usage) and receiving an annual renewal.
What are the advantages of an ASO plan for employers?
Full disclosure – ASO plans aren’t perfect for every employer, but for the right employer, there can be a number of advantages.
- Lower Costs. Paying only for actual claims made will generally bring costs down. The main cost savings component comes from the claims experience.
- Plan Flexibility. Employers pay claims throughout the year, allowing money to be spent on actual plan usage. The employer assumes the risk until the stop-loss level is reached and therefore can cater the benefit plan to the needs of their employees.
- Employee Satisfaction. Plan flexibility to tailor the needs of the staff and dependents covered creates the satisfaction of employees and will create a lower turnover.
So, is an ASO plan right for you?
Take the test! Take it right here to find out if an ASO plan is right for you, or download a copy by clicking the button below.