Administration Services
 
Methods of financing an employee benefits plan: ASO ~ Administration Services Only

Problem:

Fully insured plans are expensive. Renewals are unpredictable.

Short term solution:

Reduce the current coverage.

Conduct a market survey, find lower rates, switch carriers (but not too often!).

Long term solution:

1. Implement a Claims Management Strategy, and/or

2. Adopt a Wellness Strategy, and/or

3. Implement alternative funding strategies.

Self Funding (ASO)

What is Administration Services Only (ASO) Funding? ASO Funding is available to plan sponsors of employee groups having 20+ employees. It is an alternative offered rather than the traditional insurance plans of paying a monthly premium amount for each employee to the carrier. These traditionally fully insured plans charge a premium per employee and his/her dependents if applicable. The premium determined by the insurer builds in the cost of paying claims, reserves for incurred but not reported claims, premium tax, profit and agent commission.

With the ASO funding model, there are no premiums charged. The charges to the plan sponsor are for the claims themselves, the fees to process/adjudicate them, the applicable taxes and the agent’s commissions (if applicable).

Advantages of ASO Funding

There are no built in costs for reserves into the cost of the plan. Since the plan sponsor is paying for claims plus the fees to process them, he/she is not paying a higher amount per employee per month to secure a reserve for incurred but not reported claims.

With ASO the client takes control of his/her plan. They have the ability to design the benefits plan as they would like to see it incepted and in the most suitable manner for their company’s employees.

There are no hidden costs to the plan sponsor. Basically, they pay to have the claims processed and the fees to the provider (and the agent). Since they are the ones paying for the claims, they can select which amounts will be paid on what line of benefit rather than being restricted by the insurer’s plan design.

There are no year-end renewals with increases in premium rates that apply high inflation factors. The costs of the claims are charged according to what they are retailed to the general public for and the plan sponsor pays for that amount rather than a project inflationary factor.

…cut the fat out of your fully insured plan!

…get rid of unreasonable rate increases!

If you would like more information on our A.S.O. Programs please contact MEBA for a no obligation quotation for your firm.