Administrative Services Only (ASO) is an agreement that a company uses when they decide to fund their employee benefits plan. It involves hiring an external vendor or a third-party administrator to take care of the administration of the company’s health benefits plan. It is important to highlight that the external vendor does not provide the benefit per se. As the term Administrative Services Only implies, their job is to handle the administrative aspect only.
For example, Company A decides to fund their health benefit plan for employees. The company hires an insurance company to review and process claims made by employees under Company A’s health benefit plan. While the claims are processed by the insurance company (external vendor), the claims themselves are paid for by Company A.
What health benefits coverage do Administrative Services Only (ASO) plans provide?
Though the health benefits coverage details of each company vary, Administrative Services Only (ASO) typically provides doctor’s check-ups, prescription medicines, and hospital stays. Depending on the company, Administrative Services Only plans may also cover dental benefits, short-term and long-term disability.
What are the pros of having an Administrative Services Only (ASO) Plan?
Having an Administrative Services Only (ASO) Plan in place can yield potential financial advantages for companies. Because it is a self-funded benefit plan, an ASO plan allows a company to have greater control of benefit costs. They can be flexible and customize the benefits to fit the company’s needs.
The annual funding amount per year is based on the actual paid claims made by the company. Meaning, if employees have been mostly healthy throughout the year, fewer claims were made. Ultimately, fewer claims mean less money out of the company’s funds and more into savings or reserve funds. While this may seem beneficial at first glance, this arrangement does not necessarily mean fewer costs every time. There is no guarantee.
What are some disadvantages of having an Administrative Services Only (ASO) Plan?
Since the health benefit is self-funded, all claims are paid by the company. This is good if there are only minimal claims or if the employees are generally in good health. On the other hand, the company also faces potential financial risk. Accidents, sudden illnesses, surgeries, and other health concerns can cause expensive and costly claims, the employer will still be responsible for them even if it exceeds their allotted budget. To reduce financial risk, companies can invest in a stop-loss insurance policy.
What is stop-loss insurance?
Stop-loss insurance is an extra level of protection for companies. Employers will set a predetermined amount as the limit or ceiling to the claims they will pay. In case the claims go beyond this cap, anything that goes beyond the limit is covered by the stop-loss insurance. This way, the burden of paying excessive claims will be lifted off employers and they can reduce financial risk.
Do a lot of companies have Administrative Services Only (ASO) Plans?
Administrative Services Only (ASO) plans have been used by large companies to mitigate the risk of expensive claims. Its popularity has increased with small and medium-sized companies. Organizations need to weigh the pros and cons, advantages and disadvantages of ASO plans.
Try out Workstream to hire employees for
A revolutionary hiring process for Hourly positions
A revolutionary hiring process for Hourly positions Hiring hourly staff in San Francisco can be a tough job. Workstream can help accelerate the process by letting you post on job boards like Indeed within seconds.
1-Click Job Posting
No more tedious copy and pasting. We integrate with all the top job boards. All applicants funnel into one intuitive dashboard.
Print out your unique QR code and text message number. Applicants scan/text to see all open positions and apply right away.
Automated & 2-Way SMS
Engage with applicants via text. Include links to screening questions, forms, and more. Use 2-way text to answer questions.
Connect Workstream to your calendar so applicants can schedule interviews. Streamline onboarding with background check & HR integrations.
Candidate Tracking & Scoring
View all your applicants and employees in one place. Make notes on their progress. Access their docs anytime from anywhere.
We provide templates for everything from job postings to offer letters. Send links to docs and tax forms via text message so new hires sign digital copies.
What other owners
think about hiring through Workstream
"Not sure yet, you guys are killing it!"
Moody's Bistro & Beats
Currently hiring on Workstream for:
AM Hot Line Cook
PM Line Cook (Pantry)
"Workstream has provided my small business an affordable platform that allows us to screen candidates better which has saved
a ton of time."
Complete Pool Care
Currently hiring on Workstream for:
Swimming Pool Cleaning Technician
"WORKSTREAM IS AWESOME!"
Jack in the Box (JIB SCH Franchise)
Post a job for free!
Try Workstream for free to post a job.
Workstream is the mobile-first hiring and onboarding platform for the deskless workforce. Powered by automation and two-way texting, our platform enables businesses to source, screen and onboard hourly workers faster. More than 24,000 businesses trust Workstream to hire - and save up to 70% of time on hiring.