When employers are looking to cut expenses, some large companies are switching from a traditional insurance scheme to an “administrative services only” or “self-insuring” arrangement. Especially common in unionized workplaces, this can have legal implications for claimants that have been wrongfully denied benefits.
What is an Administrative Services Only insurer?
Many employees are familiar with an arrangement where their employer makes contributions on their behalf towards a group insurance plan that is underwritten by a major insurance company. The benefits may include drug and dental coverage, short term disability, or insurance for catastrophic claims.
Under an administrative services only (ASO) arrangement, the employer assumes responsibility for payment of any claims, and the insurance company is contracted to provide necessary services in relation to the day-to-day administration of the plan. This means that the insurance company is responsible for assessing claims, determining entitlement, and making benefit payments. The employer, at the end of the day, reimburses these amounts and has legal responsibility for the payments.
How can an administrative services only arrangement affect claimants?
When coverage is provided through an insurance company’s group plan, a claimant that has been wrongfully denied coverage can bring a claim against the insurer to have their benefits paid in full. However, in an ASO arrangement, there is no contract or other relationship between the employee and the ASO provider, even though the ASO provider was responsible for assessing the claim.
Many employees are not even aware that their benefits are being provided through an ASO. Since the payments are sent through the ASO, it can easily appear as if there is no difference between this arrangement and a traditional insurer group plan. The first notice they may have of this relationship is when their claim is denied.
Experienced disability insurance lawyers for wrongfully denied claims
At Jasmine Daya & Co., we have over four decades of experience successfully handling disability and other insurance claims. When your claim for benefits has been wrongfully denied, and your employer has an administrative services only arrangement in place, it may be difficult to understand your legal options.
Our insurance lawyers can help make sense of these relationships, and offer clients the benefit of over forty years of fighting against insurers on behalf of claimants. We offer free consultations to new clients. You can contact us online, or call our office at 416-967-9100 to make an appointment about your claim.