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Self-Insurance

Administrative Services Only (ASO), also known as self-insurance, is a funding methodology where your organization oversees the claims. The insurer handles the administration, and the plan benefits from lower expense charges.

Plan Structure

In a self-insured plan, Life insurance, AD&D, Dependent Life, and disability coverage remains fully insured. The shift to ASO applies to your health and dental spend – where the real savings opportunity lives.

Pooled Benefits

  • Stay the Traditional approach
  • The insurer carries the risk.

Health and Dental Benefits

  • Go ASO
  • Your organization pays claims as they occur, including the administration fee. The insurer processes claims – you fund them.

How you pay claims

ASO isn’t one-size-fits-all. How you fund your claims each month comes down to the preference of the organization and appetite for variance.

Budgeted Rates

A fixed monthly deposit is set each month to fund claims. If the monthly deposit exceeds the total claims incurred, the remaining balance is credited to a surplus account. If claims are higher than the monthly deposit, the shortfall is either covered by funds available in the surplus account or, if there are insufficient surplus funds/dollars in your reserve, the provider will request an additional payment from you.

  1. PRO: Predictable monthly cash outflow.
  2. PRO: Surplus builds a reserve for future claims
  3. CON: Deficit months a top up is required.
  4. CON: Requires an upfront reserve to start.

NOTE: The reserve is a buffer set aside to support negative months. 

In Arrears

Pay as claims come in. 1-2 months of claims is required for cashflow. No deposit required. The insurer pulls exactly what was claimed each month. Nothing more, nothing less. Pure pay-as-you-go plus administration.

  1. PRO: You only pay what is claimed + administration.
  2. CON: Monthly cost varies, making it challenging to budget.
  3. CON: High-claim months hit cash flow directly.

Risk Mitigation

Moving to ASO doesn’t mean going unprotected. We put specific safety measures in place on every self-insured plan.

ASO typically makes sense for larger groups or organizations with consistent claims history. We review multiple years of your data to determine if the switch makes financial sense and when this may be appropriate. 

  • Stop-loss pooling
  • Provincial high-cost drug support
  • Drug maximums
  • Health and Dental maximums
  • Monthly utilization monitoring
Let’s Build a Better Benefits Experience, Together.
Claims Experience Data tells the whole story. If you have not seen yours before, get in touch!
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