Have you explained to your clients how beneficial using an Administrative Services Only (ASO) group benefit plan can be for their business and employees? An ASO plan allows companies to attract top talent, while keeping benefit costs manageable. Here are five common misconceptions about ASO plans and the truth behind them:
1) Using an ASO plan will cause monthly costs to be unpredictable
No company wants the uneasy feeling of having a benefits plan that has an unpredictable monthly cost. Many companies are drawn to traditional plans simply for the predictable monthly cost. The good news is that a Budgeted ASO plan provides predicable payments that can be made on a monthly basis. The monthly deposit is set each year, based on a company’s past claims history. The plan takes into consideration that claims can fluctuate month to month but will balance out by the end of the year. Benecaid’s Budgeted ASO plans are also carefully monitored to prevent any surprises at time of renewal.
2) Small- to medium-sized businesses can’t use ASO plans
Benecaid’s ASO plan was made specifically with small- to medium-sized businesses in mind. They allow for the same high-quality benefits as traditional health insurance plans, while managing costs for a smaller-sized company.
A big benefit for small-to medium-sized companies is that the administrative costs of ASO plans are much lower than those of traditional health insurance plans. While traditional insurance plans may charge administrative fees between 25% to 35%, an ASO plan only charges between 12% to 20% but still provides the same or comparable benefits. The experience for employees is the same regardless of if it’s an ASO plan or a traditional fully insured plan.
3) A small company can go bankrupt if their ASO plan has huge claims
This is simply not true. Each company sets a 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.
4) Employers cannot have employees share costs with ASO plans
Just like a traditional insurance company, there can be a cost sharing amount for employees to distribute amongst the group (i.e. employees paying 20% of costs, while the company pays the remainder).
5) You cannot receive a drug card from a third party administrator with an ASO plan
ASO insurance works exactly the same as fully insured plans, so they do, in fact, provide a drug card. Employees can use the drug card at the pharmacy or dentist. Also, the use of a drug card is not exclusively restricted to the cardholder; the employee can add his/her dependent(s) to the card as well.
ASO plans are the perfect solution for small- to medium-sized businesses looking to provide insurance plans to their employees. ASO plans provide long-term sustainability and cost savings for the employer. For the employees, they get to continue enjoying the same great benefits they had under a fully insured plan.
To learn more about ASO benefits, contact your Advisor or one of our Benecaid Benefits Consultants today at sales@benecaid.com, or by phone at 416-626-8786.
