Administrative Services Only (ASO) plans, also known as self-funded health care, are arrangements where a company pays for employees’ eligible health and dental claims, up to chosen deductible level. Once the deductible level is hit, insurance covers any remaining claims.
There are many advantages to self-funding a group health and dental plan, and the benefits of doing so not only benefit the company but the employees also.
Customize your benefit offering to the needs of your staff
As an employer, you want to remain competitive. However, to retain top talent, you need to provide your employees and prospective employees with the best benefits possible, all while managing your costs. This is why ASO benefits are quickly becoming an attractive option for employers.
Similar to conventional insurance plans, ASO’s provide companies with strong group benefits, according to Benefits Canada. Employees can also receive drug cards, cost-sharing options, and stringent claims adjudication.
Also, ASO plan costs are based on actual paid claims and experiences, instead of anticipated claim increases used by traditional insurance plans.
Lower Cost for Everyone
The biggest benefit to using an ASO plan over a traditional insurance policy is that everyone enjoys a lower cost.
With an ASO plan, companies are assuming some of the risks; therefore, they get the savings from a better claims experience instead of passing those savings on to the insurer. If the claims are higher than expected for the year, Stop Loss coverage protects against the catastrophic health claims in your ASO plan.
Also, with lower administration costs and by eliminating insurance company profit margins, costs are reduced even further. This allows companies to pass those savings on to employees, thus providing them with superior benefits and coverage that don’t cost a fortune.
Benefits Canada compared the administrative fee of conventional insurance to budgeted ASO and found that conventional plans cost 25 to 35 percent while budgeted ASOs cost 15 to 20 percent – a significant difference for a small businesses with limited funds.
Take Advantage of the Flexibility
With a traditional insurance plan, there is very little flexibility – you are limited to pre-defined plan designs that suits the structured options of that insurer. When you set up ASO benefits, there are endless possibilities for designing a group benefits plan that works for each individual company.
You can create coinsurance limits that suit the company’s needs, create deductibles that employees can afford, and tailor coverage and exclusions. Furthermore, requesting insight from employees to see what deductibles and payment options they like will also allow you to evolve the benefits plan to ensure more employees find value in their plan.
More Employee Satisfaction
When employers have the flexibility to tailor the plan to the needs of their staff, employees are more satisfied. Employers can use this flexibility to their advantage to attract better talent and keep the workforce they have.
To learn more about ASO benefits, contact your Advisor or call us at 1-866-361-2998 to speak with one of our experienced Benefits Consultants.