For many companies, ASO remains that most attractive value proposition, yet the least understood. Working with our advisors, we’ve collected the top 5 objections to ASO plans and provided you with facts for you to help your clients make the best decisions for their businesses.
1. ASO plans are only for large corporations
Historically, ASO plans were only available for large organizations who, due to their large number of employees, could sustain the monthly fluctuations in claims.
With the evolution of third-party administrators (TPAs), small companies can now benefit from the ASO model as well. Using a budgeted ASO plan, our experienced underwriters use systematic formulas to accurately predict groups’ monthly deposits. These formulas work in the same way for small or large groups.
One of the reasons budgeted ASO is better for smaller businesses is that traditional insurance tends to have higher administration fees for smaller businesses (25% to 35%). Budgeted ASO providers have built their business models to serve smaller businesses and can set more reasonable administration fees for the same size business (12% to 20%).
2. ASO Stop Loss levels are too high for my small business ($10,000 – $15,000)
A group’s Stop Loss level is essentially it’s per employee deductible. Groups can customize their Stop Loss level to best represent the level of risk they want to take. Traditional Stop Loss deductibles range from $10,000 – $15,000 and do not make sense for small groups. Benecaid’s approach to ASO and to the SMB market lies in our proprietary “variable” Stop Loss levels. We offer Stop Loss levels as low as $1,000 per certificate.
3. ASO plans don’t have any cost containment strategies
With an ASO plan, deposits in the groups’ reserve account belong to the group. Cost containment strategies are imperative to ensure plans remain affordable year after year. Plan design maximums and limits are managed in the same way as with a traditional plan. They include eligible and ineligible expenses, reimbursement percentages, annual and lifetime benefit maximums, etc.
Transparent monthly usage reports are provided to clients and advisors, with a breakdown of claims paid by type of claim. Each group has a dedicated Account Manager that works with advisors (and groups) to develop specific strategies for each group. In addition, Account Managers are available to work with plan members on provincial integration to ensure that they maximize the support offered by their province for example The Trillium Drug Program (TDP) in Ontario.
4. Will my monthly payments fluctuate?
Benecaid uses a budgeted ASO plan which allows the employer to pay a predictable fixed amount every month. The budgeted amount is estimated by our team of underwriters using a) proprietary algorithms b) the groups’ own claims history and c) the overall trends of our block.
At the beginning of the plan year, we request two months of deposits – this creates an adequate float in their Reserve Account. Claims are unpredictable and will fluctuate month over month, the float in the Reserve Account enables Benecaid to reimburse employees’ claims seamlessly, limiting the need for top up payments unless the group grows or the float is insufficient.
Throughout the plan year, monthly usage reports are provided to ensure groups are aware of their Reserve Account balance. At the end of the plan year, if claims are less than anticipated, the surplus belongs to the employer.
Contrary to common perception, ASO plans are customizable at any time during the plan year, whereas a fully insured solution isn’t. For example, large claims on a fully insured plan will be included in the full experience at renewal resulting in a large premium increase. The ASO advantage is in the event claims are escalating, our Account Managers can make plan design recommendations such as drug cap and adjusting co-insurance levels, throughout the year in order to control and contain costs going forward.
5. Virgin groups shoud not enrol in an ASO plan because they do not have any claims experience
A key component of creating the budgeted monthly deposit in an ASO plan is to use the group’s previous claims experience to predict future claiming patterns. With a virgin group, there is no previous experience to draw on. Our experienced underwriters use mathematical equations and the experience of thousands of virgin groups to expertly predict a group’s deposit.
Benecaid has been doing this for over 15 years – our conservative approach aims to prevent the need for top-ups and increase the probability of an end of year refund.
To participate in a new pilot program for virgin groups that allows them a risk-fee preview of how their group would perform under an ASO structure; contact Darren Sacks via email at dsacks@benecaid.com.
Are there any objections that we missed? Let us know. Our team of Executive Benefits Consultants are available to answer your questions and support you during the sales process – call or email them at advisors@benecaid.com today.
