Administrative Services Only (ASO)
ASO plans have been around for a long time. Until the recent past they were really only available to large employers. Here is a brief description.
The employer pays the claims for reimbursement expenses like drugs, medical and dental costs of their employees and dependants. Rather than doing it directly, they use a Third Party Administrator to pay the claims and track the paperwork. ASO service fees range anywhere from 12% to 20%. Typical traditional benefits have a built in expense factor of 25% to 35%.
An established company can determine the probable claims for any given year based on previous experience, and then budget accordingly. Today’s available technology, as well as current pooling methods, now allow small companies to develop big company strategies, using established, big company methods.
The ASO account is often supplemented with a catastrophic loss plan to protect the employer’s costs in the event of unexpected high claims. A more detailed explanation of the workings of ASO is available here from our ASO expert and business partner, the Benefits Trust. All the details are found on that link.
Traditionally “insured” benefits such as life insurance, etc., can also be added to the ASO account and now we are starting to touch on what are often referred to as a “Hybrid Plan”. More details on Hybrid Plans are covered on a separate menu.
If you want to see if you should be looking at an ASO account, you should complete this questionnaire for yourself by clicking here . It is short, private, and will help you with your questions.