Being on the open market has an associated cost you may not have thought about. In fact, you may think that communicating with 3 separate companies is how everyone is running their business. We want to challenge that mindset with a comprehensive ASO model.
Ask yourself this: How much time could you save by only communicating with 1 company? Would that be a positive impact on your daily task list?
Here are a couple points to think about:
1. On the open market you have 3 separate companies handling your payroll services, workers’ compensation insurance and your employee benefits. They don’t talk to each other. This can be a huge time zap for you or your HR manager. Connecting with each of these key service companies to make sure someone termed correctly and efficiently can take up to an entire day of work. If it is done correctly, this one task can take several days of calls and meetings to fix.
2. Moving your business to an ASO can give you the advantage of reducing liability. For example, let’s say you termed an employee off your payroll. With an ASO, that information would go to the benefits department who then sends out the COBRA termination letter. This means it is all coordinated. If you are doing this on your own, someone from your company will have to notify your payroll services provider, then notify your health and ancillary carriers and also send out a COBRA termination letter. So if you term someone on the payroll and notify the health or ancillary carriers, but forget to send out a COBRA letter this could be a big problem. If this is not completed correctly, your termed employee will need medical insurance and could end up beyond the window to qualify under COBRA. This can easily become a lawsuit.
So, from a compliance perspective, the ASO model makes sense. You have one company that communicates between the different departments versus 3 separate companies that don’t communicate with each other. Many times companies simply forget to term the employee on company benefits. The carrier bills the company even though the employee has been long gone. How would the carrier know this if no one notified them? With the ASO, once you term the employee in the payroll system, the benefits department is automatically notified and they in turn will notify the carrier. This alone could save the company thousands over the year.
Click here to connect with one of our experts. They can help guide you through an analysis and give you some ideas on how to reduce your cost of labor.
A Complete Guide to Working With An ASO
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