ASOs are also known in the marketplace as Administrative Services Organization or Administrative Services Only. Either term is correct in its meaning. These organizations provide similar outsourcing services to similar sized companies as do PEOs, with a key difference. The difference is that the service provided through an ASO does not establish a co-employer relationship with the client’s employees.

In recent years, there has been a growing interest in ASO services among smaller companies. They sometimes prefer ASO services to PEO relationships because of - established relationships with insurance brokers; previous experience with deep losses relating to workers compensation among companies in risky industries; or an inability to reach minimum contribution levels for health insurance. In other cases, the prospect simply does not fully understand or want to accept the co-employment model. It is sometimes perceived as a more complex and involved relationship, and particularly in today’s economic environment, the ASO model seems simpler and less risky.

With an ASO model, clients can retain the freedom to shop independently for and retain control of their insurance products and plan policies for their own organization. Since insurance products are no longer part of the contractual arrangement, only services are left to consider. Thus the term administrative services only has sometimes been adopted for ASOs. For smaller companies just looking for HR support services, they have three services options with ASOs:

• commodity like HR transaction level administrative services, such as payroll tax filing
• HR expertise priced and delivered by the project
• HR expertise acquired from the provider on a retainer basis, where the company knows it requires outside help with certain HR knowledge

The ASO provider oversees the day-to-day administrative aspects of managing a company’s human resource functions, on a service by service basis. The client company retains responsibility for regulatory compliance, insurance coverages, and for being the employer of record. The employee’s taxes are reported and deposited under the client’s federal employment identification number (FEIN). Clients are billed for all HR services on an “a la carte” or bundled basis by the ASO. ASOs offer:

• Payroll outsourcing and tax compliance services
• Benefits administration services
• HR administrative services
• Professional insurance selection and risk management services