Administrative Services Only (ASO)
What does Administrative Services Only (ASO) mean?
With an Administrative Services Only (ASO) plan - Self funded, employers (usually larger) operate their own health plan as opposed to purchasing a fully-insured plan from an insurance carrier.
Employers will choose to self-insure because it enables them to save the profit that an insurance company adds to its premium for a fully-insured plan. However, self-insuring comes with much larger risk in the event that more claims than expected must be paid.
Things to consider with an ASO plan:
- There are two costs to consider: fixed costs and variable costs.
- The fixed costs include administrative fees, any stop-loss premiums, and any other set fees charged per employee. These costs are billed monthly by the Third Party Administrator (TPA) or insurance carrier, and are charged based on plan enrollment.
- The variable costs include payment of health care claims. These costs vary from month to month based on health care use by covered persons (eg: employees and dependents). There are different ways to setup payment of claims. Speak to your MDL Benefits Specialist to find out more about the different payment methods.
- To limit the risk, most employers will include stop-loss insurance which reimburses the employer for claims that exceed a predetermined level. This coverage can be purchased to cover catastrophic claims on one covered person (i.e. Travel insurance) or to cover claims that significantly exceed the expected level for the group of covered persons.
For more information on ASO plans, contact your MDL Benefits Specialist.