Administrative Services Only (ASO)
Administrative Services Only (ASO) is a different way to fund an employee benefits program. It is a self-insured plan where unused premiums at the end of the year are not lost. Unlike other insurance programs, an ASO will use any extra amount of premiums paid and roll them over to the next year or refund them.
This type of funding is usually used for medical and dental coverage. First an initial flat fee is determined to cover the administration costs for the year, usually forecasted from previous years. At the end of the year the flat fee and the amount actually used is compared and any extra can be reinvested into the program or used at the preference of the company. This way the company only pays for what it uses. This type of plan would be beneficial to a company that is continuously over paying for what they use in premiums. The benefit of this type of program would have the ability to lower cost by assuming more of the risk.
Stop-loss
Since there is a risk of the premiums exceeding the flat fee that was determined the employer can choose to issue stop loss insurance. Stop-loss insurance may pay a portion of each claim to keep the expense low or pay claims above a certain amount.
This could be a service that would be suited for you company. If your administrative costs are fairly constant and predictable you could cut costs by paying the administration fees yourself. If you would like to find out if ASO is right for your company please contact us and we will determine if this option would be beneficial.
