ADMINISTRATIVE SERVICES ONLY HAS LOTS OF FLEXIBILITY
Administrative Services Only are for those employers who are experienced and have some back office sophistication and only need specific services to help complement what they have in place already. These services are less expensive and more flexible than PEO services, but come with a more liability and risk.
An ASO option is very similar to a PEO in some ways. Through a contractual relationship, you are outsourcing the administration of payroll, payroll tax payments, workers compensation calculation typically also a pay-as-you-go arrangement, workers compensation payments, health benefit administration, and other related services. The biggest difference between an ASO and PEO is that each of these services are based on your sole liability and are your policies. Here are a couple of items for clarity:
– Your State Unemployment ID
– Your workers compensation policy
– Your health benefits policy
By having these in an ASO arrangement, you outsource the administration of these services, but the liability and responsibility for each of them falls back on you, the business owner. If you are comfortable with the liability, then the flexibility of having control of each of these services independantly has some advantages. You will be able to plug and play or change carrier for an individual service without having to change them all. You can change the coverage levels or service agreements for each service independenlty.
In the even you have a workers compensation claim, or a state unemployment claim, or high useage of your health insurance policy, the utilization of these services will not have the large pool like a PEO has to dilute the impacts to your pricing. These claims will impact you directly. This could result in higher increases than if you had these same claims in a PEO arrangement.
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