ASO (Administrative Services Only)

An ASO arrangement is a self-funded plan where a major carrier (Aetna, BCBS, Cigna, UHC) provides the administrative services — network access, claims processing, member services, reporting — but the employer pays the actual claims from its own funds. The carrier is not the insurer of last resort; the employer is. Stop-loss insurance backs the arrangement to cap catastrophic risk.

ASO is the on-ramp most mid-market employers use to move from fully-insured to self-funded. It looks and feels like a traditional group health plan to employees — same ID card, same network, same customer service line — but the money flows differently. Instead of paying a fixed premium to a carrier, the employer pays claims as they happen plus a per-employee-per-month admin fee. In a good claims year, the savings versus fully-insured can run 10 to 25 percent. In a bad year, stop-loss kicks in above the specific deductible. The tradeoff versus an independent TPA is convenience (bundled network and admin) versus flexibility (data access, vendor integration, plan-design creativity).

The takeaway: ASO is a solid first step out of fully-insured for employers with 50 to 500 lives who want the carrier brand without carrier pricing. Beyond 500 lives, independent TPAs usually offer better data and cost control.