Every business owner wants to be able to control and predict costs. Benecaid hears this time and time again when speaking with advisors and small businesses about group insurance. Unfortunately, businesses often see the cost of their benefits plans increase year over year.
It’s this scenario that leads many groups to consider an Administrative Services Only (ASO) plan.
What’s an ASO plan?
With an ASO model, the group purchases insurance only for unexpected and potentially high-cost claims. The group self-funds predictable claims such as dental cleanings, maintenance medications, optometrist visits, etc.
Benecaid’s flexStyle solution is an industry-leading Administrative Services Only (ASO) plan designed for small and medium sized businesses. It’s an ideal choice for companies with 5 or more employees who need their benefits plan to remain affordable over the long term.
Here’s how it works, in a nutshell: the group pays a predictable fixed amount every month, referred to as a budgeted deposit. This deposit is put into a Reserve Account which pays for the plan members’ predictable day-to-day expenses, as well as insurance premiums for the coverage that protects the group against high-cost claims.
The amount of this budgeted deposit is determined by a number of factors, including the group’s claim history, demographics, plan design and desired mix of self-funding and insurance coverage
Some of the benefits of an ASO plan are as follows:
- The ability to customize coverage
- Only pay for what plan members use
- Unused funds can be refunded to the plan sponsor(s)
- There are no bad surprises at renewal
ASO in Action
The true upside of Benecaid’s Administrative Services Only (ASO) plan can best be understood in comparison with a traditional fully insured plan.
In one case study, a company with 50 employees had been struggling to keep their benefits plan affordable with a traditional fully insured approach. From 2016 to 2017 they saw an increase of more than 9% at renewal. From 2017 to 2018, they saw the cost of the plan increase by an additional 6.92%. These significant plan increases motivated the business owner to consider alternatives.
When compared to the company’s 2018 group renewal, Benecaid’s flexStyle ASO proposal projected savings of 11.86%. Based on this proposal, the business owner made the decision to switch to an ASO plan.
It’s easy to project savings, but the proof came at the time of the group’s first renewal. At that time, not only had the business owner realized those projected savings, but they received an additional refund from their reserve fund because claims had been less than anticipated!
Learn More About ASO
Download the Benecaid flexStyle case study to review the results of this company’s switch to ASO in more detail, and to learn more about how ASO plans are structured to control costs.