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Administrative Services Only Plan - ASO

Administrative-Services-Only-Plan-ASOAdministrative services only plan (ASO) is an arrangement where the company funds its own employee benefit plan and hires an outside firm to provide administrative services. A company can hire an insurance company or third party administrator (TPA) to evaluate and process claims. In this arrangement the company is responsible to pay its own claims.

ASO plans offer more flexibility to the employer however one needs a knowledgeable insurance broker to act on the company's behalf. ASO plans are complex and require additional administration by the employer.

There are many TPAs offering third party administrative services. Your company need to tread carefully before signing a contract without professional guidance and advice. TPA’s often have contracts that restrict the employer’s flexibility and levy additional administrative fees without the employer's consent. Assuris provided protection on the company's deposits to TPAs in the event of insolvency. 

In ASO plans after twenty a four month period if the deposits in the company's administrative only plan is not used it is forfeited. The forfeited contributions are not refunded back to the employer. The forfeit rule is legislated by CRA. There are a number of different options available to the employer not to forfeit their deposits. A Stone-Hedge Financial Group Inc. insurance broker can act on the employer’s behalf providing guidance and advice to implement the most suitable solution.

Not all benefits are suitable to be self-insured by ASO plans, they include prescription drugs, short and long term disability, critical illness, life insurance and travel insurance. In addition even if the employer reinsures expenses such as drugs above a certain limit, once an employee requires medication for a chronic long term medical condition the employer is liable to pay for these expenses on a long term basis.

The biggest benefit is that the premiums belong to the employer and any unused portion can be used by the employer to pay for eligible expenses as they arise. The other benefit is the employer can offer a broader range of eligible benefits not covered by traditional health care plans.

Below is a List of Eligible Medical Expense

Canada Revenue Agency - (CRA)

Which medical expenses are eligible?

The cost of any of the following items can be claimed at line 330 or used in the calculation for a claim at line 331. When you click on any of the medical expenses below, a brief description of the expense is given along with any certification needed, including the need for an approved Form T2201, Disability Tax Credit Certificate. This list is not exhaustive.

For a more detailed list and additional information of allowable medical expenses, see IT519, Medical Expense and Disability Tax Credits and Attendant Care Expense Deduction. To verify if a specific profession is recognized, see Authorized medical practitioners by province or territory for the purposes of claiming medical expenses.

Note:

The person with the impairment in physical or mental functions may be able to claim some of the following expenses as a disability supports deduction on line 215. He or she can claim these expenses at either line 215 or line 330, or split the claim between these two lines as long as the total of the amounts claimed is not more than the total expenses paid. The person may claim whichever is better for him or her.

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Forms and publications

Source: Canada Revenue Agency (CRA)

 

Contact Us to Set Up a Company Administrative Services Only Plan

 


The information provided on this web site is intended for general information only. It should not be construed as legal, accounting, tax or specific insurance and investment advice. Clients should consult a professional advisor concerning their situations and any specific insurance and investment matters. While reasonable steps have been taken to ensure that this information was accurate as of the date hereof, Stone-Hedge Financial Group Inc. and its affiliates make no representation or warranty as to the accuracy of this information and assume no responsibility for reliance upon it.







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