What is an ASO Benefits Plan and What are the Advantages?
Administrative Services Only: A Complete Guide to ASO Benefit Plans
Businesses offering health insurance are in high demand with the spiraling cost of health coverage. Did you know that 51% of insured Americans receive health coverage via their employer?
Adding to your existing self-funded health insurance plan is an opportunity to provide your employees with the valuable coverage they need to stay healthy long into the future.
Today, we will examine Administrative Services Only (ASO) health plans and whether they make sense for you.
What is an ASO Health Plan?
ASO health care is an agreement that companies use when they want to provide employee health benefits but would rather a third-party vendor handle its administration.
For example, an employer may be responsible for paying for claims while asking a third-party organization to process and evaluate claims. ASO insurance plans were designed primarily for larger companies that prefer to outsource. They also spread the risk of costly claims over a more significant number of paying employees and their dependents.
What Does ASO Mean in Insurance?
It pertains to employers that prefer to fund their health benefit plans without assuming the challenges of administering it themselves. One of the primary advantages is that under an ASO health plan, a separate vendor is responsible for managing most of its day-to-day operations.
Types of ASO Plans
There are two types of ASO insurance plans to consider. These vary and come with their advantages and disadvantages.
- Pay-as-you-go Plans – These plans are paid by the employer and vary monthly. The number of claims determines how much you can expect to pay. The obvious issue is the lack of predictability in costs.
- Budgeted Plans – A budgeted ASO health insurance plan guarantees consistent monthly ASO fees. These plans are established based on your claim history for the previous year. The surplus or deficit is reconciled at the end of each year.
Pros and Cons of ASO Insurance Plans
Opting for ASO depends on your situation. There are a range of benefits and disadvantages that play into your decision.
Cost Savings – Group insurance plans are based on anticipated claims for the year, whereas ASO insurance is based on actual claims. If you experience fewer claims, you keep the cost savings to reinvest.
Additional Benefits – The fact cost savings are common means you can provide your employees with other health benefits not ordinarily offered via conventional group insurance plans.
Stop-Loss – You can counter catastrophic claims via a stop-loss policy. A stop-loss policy limits your losses. The most common stop-loss policy among employers is $10,000.
Profit Erosion – If you experience an unexpected number of claims for the year, the costs borne by your business could erode your profits or even eliminate them. Realized Deficits – You are fully responsible for any losses experienced by your ASO insurance policy. Employers choose to avoid using ASO for high-impact policies, like life insurance, for example.
Cost-Efficiency – In many cases, traditional plans may be more cost-efficient for your business. ASO health care is primarily aimed at larger companies, where costs can be spread across a larger pool of employees and their dependents.
How Employers Can Develop an ASO Strategy
If you choose ASO for your company's healthcare plan, you need to have a strategy for going about it properly. With so many online resources and competitors, there are so many options you can choose for your business.
Create an Action Plan
The first step is to create an action plan. Determine a firm timeline, gather details, and inform anyone who the decision might impact.
You should also consider any additional benefits you wish to include as part of your action plan. For example, if you want musculoskeletal care for your team, consider these questions to find the right provider:
- How much do they cost?
- What sort of services do they offer?
- Are these services beneficial to your employers?
- Do they provide top-notch support?
- Will you need to lock yourself into a long-term contract?
Take the time to search for providers and weigh up your options. It’s also important to consult with your employees throughout the process.
Gather a Team
Transitioning to ASO health care is a company-wide effort. You will need to work with other professionals to assess the project's viability and go through the process of actually making the transition.
Some of the professionals involved will include accountants, fiduciaries, and account brokers. You also need buy-in from stakeholders. Decide on a Stop Loss
Determine where you want insurance to begin coverage. Most employers opt for a figure between $10,000 and $15,000. Any claims under your stop-loss figure must be paid out of your pocket before the insurance kicks in.
Designate an Administrator
The success of an ASO insurance plan depends on the person administering it. You need to designate a vendor who will provide the administration. In the same way, as you search for additional benefits, you will also need to weigh up your options.
There also needs to be a point of contact responsible within your own company. ASO is more in-depth than traditional group insurance plans, so you must have the system to manage it.
Communicate with your employees regarding the proposed transition and allow them to ask any questions they might have.
If you plan on adding more health services to the plan, consult with your team to ask them what sort of health-related services they would like to be included within their plans.
Good communication is crucial to making the most of these plans' benefits.
Hinge Health: The Perfect Addition to Any ASO Plan
Opting for a third-party administered healthcare plan can be beneficial. The option to add more healthcare services than are available on the classic group health insurance plan is one of the reasons why employers select this option.
Hinge Health is the perfect addition to any ASO plan because we provide end-to-end digital healthcare for chronic back and joint pain.
We offer the #1 complete Digital MSK clinic for employers. Your employees can access state-of-the-art clinical services from the comfort of their homes, and your plan covers it at an affordable rate.
To learn more about what Hinge Health offers, contact us now.