Administrative Services Only Agreement

What Does Administrative Services Only Agreement Mean?

An Administrative Services Only (ASO) agreement is a setup where an organization pays another organization to handle administrative functions related to insurance or benefits. By outsourcing only the administrative tasks, organizations can manage claims independently and avoid paying insurance premiums.

Insuranceopedia Explains Administrative Services Only Agreement

Insurance companies may still be involved in ASO agreements; however, unlike traditional employee benefit plans, their role is limited to providing administrative services, such as processing claims, without making benefit payments.

While companies using these arrangements save on premium costs, they assume greater risks. This approach introduces unpredictability to benefit programs, as employers cannot anticipate the total amount they will need to pay for claims in advance.