The Biggest Benefits of Working with an Administrative Services Organization (ASO)

An Administrative Services Organization (ASO) is a professional services organization that offers Human Resources (HR) back-office services. Because every business can benefit from expanding its HR capabilities, ASOs help employers enhance their implementation of employee benefits, regulation compliance, and workers’ compensation management.

Working with an ASO offers a wide range of benefits, especially if your business is looking for ways to tackle the expensive and administratively cumbersome tasks associated with employee benefits and workers’ compensation claims. Among these benefits, the single most significant benefit of partnering with an ASO is the cost savings and financial flexibility. 

How is this benefit realized? An ASO can help businesses implement programs and benefits in a comprehensive way that improves employee engagement in programs while seeking opportunities to reduce unnecessary costs. Here is how the biggest benefit of ASO partnership unfolds:

1. Customization of Benefits

No benefits package is one-size-fits-all. Each company has a unique employee population with a variety of needs and lifestyles. An ASO makes it possible for companies to customize their employee benefits plans to meet the specific needs and preferences of their workforce. Employers can offer a more tailored and comprehensive set of benefits that employees will want to use, and help employees customize their individual benefits participation to get the most out of the benefits you have to offer.

This customization can lead to higher employee benefits participation, job satisfaction, and long-term retention without the constraints of pre-packaged insurance products and wellness bundles.

2. Reduced Administrative Burden

The core purpose of an ASO is to take over the complex administrative tasks associated with implementing benefits plans and managing employee claims. An ASO will handle time-consuming matters like claims processing and dealing with healthcare providers while remaining within the context of the company's internal benefits system.

This reduces the administrative burden placed on the company's internal HR department, freeing them up to focus on strategic initiatives and day-to-day engagement with employees seeking advice.

3. Reduced Cost of Workers’ Compensation Coverage

An ASO has a honed master policy for handling workers' compensation. Effective safety prevention programs and claims management procedures can potentially reduce the premium costs of the company's workers' comp policies and access options significantly more advantageous than traditional insurance outlets.

An ASO's size and buying power, along with proactive claims management services, can ensure a clear advantage for companies experiencing specific challenges regarding workers’ comp claims or costs. These master policies are designed to increase workplace safety, take attentive care of injured employees, and reduce the cost of the overall policy premiums.

4. Direct Control Over Health Care Costs

An ASO can help restructure how a company pays for healthcare benefits. With an ASO, businesses pay for the actual healthcare costs incurred by their employees instead of fixed premium rates to an insurance provider. This can result in substantial cost savings, particularly if the workforce is generally healthy and claims are lower than the premiums would have been.

Paired with wellness programs and policies that promote employee health, this simple change to your healthcare structure offers a significant opportunity to save on this essential benefit.

5. Cash Flow Advantages

Companies benefit from improved cash flow management under an ASO model. With an ASO, payments are based on the cost of each claim rather than predetermined premiums. Through this expediency, companies can retain more cash within the business and lose less on monthly or annual benefits costs. While claim costs must be considered, the cost of total and individual claims can be minimized through safety, health, and claims program management.

6. Access to Expertise

ASO providers offer the advantage of expert HR insights and professional teams. They can, therefore, improve a company's benefits administration, compliance, and risk management with greater skill than a company may have had access to in the past. Companies can leverage this expertise to ensure that their benefits programs are thoughtfully designed and managed efficiently to comply with all regulatory compliance.

At the same time, an ASO reduces the need to hire high-end HR expertise in-house, thus minimizing staffing costs and concerns at the same time.

7. Reduced Administrative Burden

One of the core functions of an ASO is to reduce the total amount of HR work that is required of a company's internal HR team - whether that is one person or a small department of people dedicated to the company's smooth internal operations. Administrative tasks such as routine paperwork needed for compliance or the involved process of managing a claim can be handled by the ASO, leaving on-staff HR to focus on their core duties,

ASO organizations take over the complex administrative tasks associated with managing benefits plans, such as claims processing and dealing with healthcare providers. This reduces the overall administrative burden on a company's HR department, increasing its internal effectiveness.

8. Risk Management Support

Working with an ASO creates a unique risk profile, one that focuses on risk management. Although ASOs typically involve the company assuming more risk compared to traditional insurance (since the company pays for actual claims), many ASO arrangements include stop-loss insurance to protect against unexpectedly high claims. This provides a safety net for businesses against significant financial risk.

Your ASO will also help you devise risk prevention programs such as safety, wellness, and training programs that can minimize the overall frequency and severity of any claims.

The Most Important Benefit of ASOs

The biggest benefit of working with an ASO organization is the potential for cost savings and financial flexibility, allowing businesses to manage their employee benefits programs more effectively and efficiently, tailored to their specific needs and risk tolerance. Working with an ASO allows businesses to seek personalized solutions, from custom benefits packages that enhance employee participation to workers’ compensation claims management which provides both better worker support and opportunities to reduce costs.

Alloy Employer Services helps clients nationwide to reduce costs and simplify administration in these key areas of workers' compensation and employee benefits. Reach out to Alloy today to discover these benefits for your company.