After years of working with self-funded groups, I've noticed a pattern that causes unnecessary stress for everyone involved. Brokers present ASO options because it feels like the "easy button" with less disruption, while often being less expensive than a TPA model. (To learn more about the true cost of the administration see Daron's blog entitled: Why Groups Choose ASO - And Why They Never Go Back.) And because the broker recommends the ASO option, most groups move forward without fully understanding what they're agreeing to, and suddenly I'm getting frustrated calls from HR staff who didn't know they'd just taken on a whole new job function.
Let me be clear: I'm not saying ASO is bad. But there's a conversation that needs to happen upfront that often doesn't, and it's creating problems that could easily be avoided.
The Problem: Everyone Thinks They Understand ASO (But They Don't)
ASO stands for Administrative Services Only. On paper, it looks great – lower fixed costs, bundled services, direct relationship with the carrier stop loss paper, streamlined approach, etc. Brokers love presenting it because it makes their proposal more competitive.
But here's what often gets lost in translation: when a group goes the ASO route instead of using a TPA (Third Party Administrator), somebody at that company now has to:
- Collect enrollment information every month
- Fill out and submit premium remittance forms
- Send enrollment data to the stop loss carrier
- Manage eligibility information
- Handle work status forms
- Process claim documentation
And in my experience, that "somebody" often doesn't know they've signed up for any of this until the first invoice deadline approaches.
When ASO Works (And When It Doesn't)
I've seen ASO work beautifully. Take one of our groups—they have a dedicated HR team with capacity to handle these functions. Before they went live, we had detailed conversations about exactly what they'd be responsible for. I explained the process, walked them through the forms, and made sure they knew I was available to help. It worked smoothly because they knew what to expect and had the infrastructure to support it.
But I've also seen the other scenario: a small group with an office manager who's already juggling HR, payroll, and half a dozen other responsibilities. They chose ASO to save money, nobody explained the administrative burden, and now they're drowning.
The ideal ASO candidate has:
- Dedicated HR staff with available capacity
- Clear understanding of what they're taking on
- Direct communication established with our team from day one
- Experience or sophistication in managing administrative processes
Groups that struggle with ASO typically have:
- Limited HR capacity or a solo HR person wearing multiple hats
- No prior self-funding experience
- Unclear expectations about their responsibilities
- No direct line of communication with our implementation team
The XLB-Ops Solution: Operational Support for ASO Groups
Here's something many brokers don't realize: even on ASO arrangements, I can help ease the administrative burden through what we call XLB-Ops—our operational support services.
If a group can't afford a full TPA but needs support, XLB-Ops allows me to:
- Fill out premium remittance forms for them
- Send invoices directly to the group
- Submit documentation to the carrier
- Walk them through the claims process
- Provide ongoing guidance and support
The catch? I can only do this if I know they need it. And I can only know that if the broker brings me into the conversation early—ideally before the sale is finalized.
Too often, I don't hear about a new group until there's already a problem. Someone's frustrated, deadlines are being missed, and everyone's scrambling. That's preventable.
The Revealing Pattern: Why Groups Move from ASO to TPA
Here's something that should make brokers pause: in my experience, groups that start with ASO often move to TPA later. You don't typically see it go the other way.
That's telling. Even groups that can handle the administrative work—groups with sophisticated finance departments and dedicated HR teams—often decide the TPA service is the better option.
Think about that. A financially savvy company with the capacity to manage ASO functions themselves chooses to pay to move to a TPA instead. That should tell you something about the real value of having professional administrative support.
What Needs to Change: The Upfront Conversation
I'm not saying every group needs a TPA. I'm saying every group needs to understand what they're choosing.
Before presenting ASO to a client, brokers should:
- Evaluate the group's internal capacity. How many people are in their HR department? What's their workload like? Have they done this before?
- Have an honest conversation about administrative responsibilities. Don't just say "you'll pay your premium each month." Explain the enrollment forms, the eligibility tracking, the documentation requirements.
- Bring me in early. Let me talk to the HR contact before they go live. I can explain the process, answer questions, and set up support systems.
- Present the full picture. Yes, ASO may cost less upfront. But if the group doesn't have capacity to handle it, they're not saving money—they're buying a headache.
- Explain the XLB-Ops option. If the group elects to move forward with an ASO arrangement instead of a TPA, let them know what operational support I can provide on the ASO side.
The Bottom Line
Look, I understand the pressure brokers face. You're trying to win business, and price matters. But you know what else matters? Client retention. Client satisfaction. Groups that feel supported and successful.
When a group goes live with ASO and nobody's prepared them for what that means, it doesn't just create problems for them—it creates problems for everyone. They're frustrated, I'm getting emergency calls, and the broker's relationship with the client takes a hit.
The solution isn't complicated: clear communication from the start. Help your clients understand the real difference between ASO and TPA. Evaluate their capacity honestly. Bring me into the conversation early so I can set them up for success.
ASO can absolutely be the right choice. It just needs to be an informed choice, made with eyes wide open and proper support systems in place.
And trust me—everyone will be happier for it.