Administrated Services Only (ASO)
Gain Better Control Over Employee Benefit Costs: Implementing an ASO program can help manage predictable claims while using Stop Loss coverage to protect against catastrophic healthcare costs.
What is ASO?
An ASO plan allows employers to take on financial risk for employee benefits, paying claims only when incurred rather than through predetermined premiums. Stop Loss insurance provides coverage for expenses that exceed a certain level, ensuring financial stability.
Group benefits can be categorized into two types. The first includes infrequent, high-claim benefits like Life Insurance and Long-Term Disability, best covered by traditional insurance. The second category consists of more frequent, lower-cost benefits like Health and Dental, which can be effectively managed through an ASO program due to predictable claims. Travel Health coverage and Stop Loss protection are recommended for minimizing catastrophic health claims.
FULLY INSURED
Non-refundable Insured Premium
ASO
Potential Cost Savings Stop Loss /Travel Health Administration Charges Paid Claims
Fully Insured Plans vs. ASO:
In a fully insured group plan, employers pay a monthly premium for employee benefits. If claims are lower than expected, the insurer retains any underwriting gains, while higher-than-expected claims can lead to premium increases in future years. Conversely, an Administrative Services Only (ASO) plan treats claims as expenses. Employers keep funds in their accounts and pay only when claims arise, allowing potential savings if claims are lower. The claims process is the same for both plans, but with ASO, employers manage their own funds for benefits.
Advantages of ASO Plans
Cost Control
By taking on some risk, employers benefit from favorable claims experience rather than insurance companies. Stop Loss coverage safeguards against high health claims, minimizing potential funding shortfalls compared to traditional insurance plans. Additionally, cost savings can be achieved through reduced administration expenses and the elimination of insurance profit and risk charges.
Plan Flexibility
An ASO plan offers flexibility in design, allowing customization of co-insurance, deductibles, and covered benefits to suit employers' needs. With Maximum Benefit administering your program, you can switch insurers without disrupting the plan or requiring employee re-enrollment for benefits like Life, AD&D, Dependent Life, and Long Term Disability.
Improved Cash Flow
In contrast to traditional insured plans where employers pay premiums for potential claims, claims under an ASO plan are paid only when they occur. Instead of the insurer holding reserves for future claims, employers maintain and manage these funds, allowing them to earn interest on their money while paying claims as they arise.
Efficient Plan Management
Monthly Utilization Reports regarding your ASO benefits provide insights into trends relevant to your group's coverage. This enables employers to effectively manage and control expenses associated with their employee benefit plans.