what is an aso

An ASO stands for Administrative Services Only. It is an agreement that companies use when they fund their employee benefit plan but hire an outside vendor to administer it. In an ASO arrangement, employers purchase specific administrative services from a third-party administration (TPA) to be carried out by the TPA. The vendor provides administrative services only, not the benefit itself. The employer takes full responsibility for claims made to the plan, and for this reason, many employers using ASO plans also establish aggregate stop-loss policies in which the insurance company takes responsibility for paying claims that exceed a certain level. An ASO can also refer to an Administrative Services Organization, which provides HR administration, payroll support, regulatory compliance, and benefits administration, but does not operate under a co-employment model. The ASO will handle the companys payroll and tax filings, but the paperwork is filed under the companys FEIN number.