If your clients own a small business, an Administrative Services Only (ASO) health insurance plan can be just the thing to take their company to the next level. These employee health benefits plans are particularly beneficial for small businesses because they offer many advantages to the business owner that traditional health insurance plans may not.
How does an ASO plan work?
A company pays a monthly deposit that is used to pay for an employee’s day-to-day dental and extended health care claims. They also pay a reduced premium to protect against high cost claims such as life insurance, AD&D, long-term disability and catastrophic drug claims. The deposit belongs to the company which means that unused funds can be returned at the end of the plan year or re-invested into the plan.
First, the group must select the Stop Loss level – this is the amount per employee that is covered by insurance. Eligible claims submitted by an employee or family member are paid using the group’s Reserve Account up to the Stop Loss level. Once claims have reached the Stop Loss level they are paid using the Stop Loss insurance.
One of the benefits of an ASO plan is that it assists companies in competing with larger corporations by attracting and retaining top talent within their niche. The most sought after employees are attracted to employers who offer only the most competitive benefit packages. If your client is able to offer a comprehensive health and dental plan to potential employees, they will have a greater chance of having their company recognized by job seekers as a top choice. It’s important to stress the fact that this particular kind of plan is extremely cost effective. ASO plans are highly flexible – costs can be planned, managed and budgeted for.
The costs of an ASO plan are based on the actual paid-out claims to employees, not on the anticipated claim, which is how traditional insurance plans usually work. Also, since your client is assuming some risk when taking on an ASO plan, they’ll also be receiving more savings. Stop Loss coverage is also a benefit. It protects companies from paying the cost of “catastrophic health” claims. This benefit comes in handy if claims are higher than expected on any given year.
Even better, there are lower administrative costs associated with an ASO plan. This is because an ASO plan eliminates profit margins of the insurance company. In turn, you pass those savings along to your clients!
Here are some statistics to give your clients some perspective on how much they’ll save with an ASO plan:
Administrative fees for conventional health insurance plans typically cost most companies around 25% to 35%. However, an ASO plan only costs around 15% to 20% for the same fees. This is an incredible savings that clients and companies will undoubtedly want to be informed of.
While Traditional Stop Loss deductibles can range between $10,000 – $15,000, Benecaid takes a different approach, one that is inclusive to small and medium sized companies. Benecaid provides proprietary “variable” Stop Loss levels, starting as low as $1,000 per certificate.
Benecaid can help combine these savings with the unprecedented ability to customize health benefits, including the ability to specifically tailor coverage and exclusions for a wide variety of your clientele – something companies haven’t been able to do throughout the years with traditional insurance plans.
Still Have Questions?
Still have questions related to ASO health insurance plans? Contact your Advisor or a Benecaid Benefits Consultant at firstname.lastname@example.org or call us at 416-626-8786.