Self-Insurance: A Profitable Path Forward
Under an ASO funding arrangement, organizations self-insure the cost of their medical and dental care programs, while risks associated with other less predictable costs (life, accidental death and dismemberment, long-term disability) are insured by one or more insurers. The plan sponsor contracts with a service provider, such as an insurance company or a Third Party Administrator (TPA), to handle services like claims adjudication and payment. Hence, they are providing Administrative Services Only (ASO) and not insurance for those particular benefits.
AGA Benefit Solutions administers ASO plans and provides organizations of all sizes the opportunity to unlock significant savings.
Take Control with Calculated Risk
Our underwriting team at AGA Benefit Solutions implements three key steps to mitigate cost fluctuations:
- Level monthly remittances are computed to align with the theoretical premium, simplifying administrative management, employee cost-sharing calculations, and budget item management.
- Claims exceeding a predetermined level are pooled via stop-loss insurance purchase.
- Quarterly experience reports are generated to monitor the plan’s financial trajectory.
Unlock Potential Savings with ASO Arrangements
In a fully insured plan, premium rates encompass claim costs, insurance tax, administration fees, insurer’s risk and profit fees, and a provision for anticipated claim cost increase (due to inflation and higher usage).
Self-insurance eradicates the risk and profit fees and trims down administration fees. Moreover, the claims paid mirror the group’s actual experience, which is often more favorable than the insurer’s inflation assumption.
Is ASO the Right Choice for Your Group?
Armed with details about your current plan, we will craft a projection that empowers you to make an informed decision about the funding option that best fits your situation.
Obtain a quote by filling our form or contact us directly.
