What is Administrative Services Only ?
Administrative Services Only (ASO) is a contractual arrangement where an employer undertakes its employee benefit plans like health, dental, or short-term disability, but outsources the day-to-day administration to an external service provider or Third-Party Administrator (TPA).
In this business agreement, the vendor company simply provides the services and not the benefit itself. For the company providing the benefits, this provides the advantages of better cash flow, lower costs, and flexibility in designing the term plans.
This business practice usually takes place for the employees’ health benefits. The initial company is liable for paying premiums, assuming risk, and maintaining statutory compliance in this scenario.
