What is an ASO?

There are some major differences between an ASO and a PEO. Understanding what services each provides should help you better determine which is right for your company.

ASO
An Administrative Services Only (ASO) provider works with your own company-funded employee benefit plan. For organizations that use a self-insurance fund, the ASO is there to manage all the administrative (paperwork and compliance) duties for the employee and the business.

For employees, they create manuals; communicate information about plans and coverage; manage initial, changes and open enrollments; help workers determine benefits eligibility; and manage COBRA for separated employees. They help employees manage Medical Spending Accounts, HRA, HAS and FSA accounts.

For employers, the ASO evaluates, processes and pays claims. They also manage compliance, including preparing and submitting government reports; creating and filing summary plan documents; and managing any accounting functions.

Some ASOs also provide administrative support for other coverages, including vision and dental plans; long- and short-term disability or additional healthcare plans. ASOs provide support for employers who self-fund healthcare coverage for their employees.

PEO
A Professional Employer Organization (PEO) works with businesses to outsource some or all the Human Resource function, beginning with payroll. These companies help processing payroll, taxes and benefits contributions through the PEO for the company’s employees.

PEO’s initial services are payroll processing, but many add additional services for their client companies. These can include healthcare benefits which allow small companies to join the PEO’s larger ‘group’ of companies for savings and access to coverage. If employees access healthcare benefits through the PEO, the PEO will manage all the administrative duties, just as an ASO would, for the company and its employees.

Some PEOs offer additional HR services, including talent management, like recruitment, training and performance management. Some offer HR support, with experts on staff to answer questions and provide information. The range of services varies with each PEO, but it begins with outsourcing payroll to them. If you’re considering working with a PEO, make sure they have all the services you need today, and some you might want in the future.