Wisconsin 75: TASC thrives in profitable niche

Don Rashke was running a small insurance agency in Stevens Point when he discovered an overlooked section of the tax code that could benefit dairy farmers and owners of small, unincorporated businesses.

The insight would become the foundation of TASC — an acronym for Total Administrative Services Corp. — a Madison company that now employs 1,085 people, all but 75 of them full time. It's on track for revenue of more than $100 million this year.

Much of that growth has come since 1995, when Rashke's son, Dan, took over the business.

The company had revenue of $4 million that year. It has been on a tear ever since.

TASC administers employee benefits, such as flexible spending accounts, health reimbursement and health savings accounts, tuition reimbursement and family leave. In all, it administers about 30 types of employee benefits and accounts, processing more than 50 million transactions a year for 65,000 customers throughout the country.

FULL SECTION: 2016 Deloitte Wisconsin 75

TASC’s sweet spot is employers with 25 to 200 people, enabling them to offer benefits that often would be too costly and complex to administer themselves. But it now has the size and scale to win much larger customers, such as a recent contract with the federal government.

This is for a company that in the early 1990s almost filed for bankruptcy.

The company was founded by Don Rashke, a typesetter at the Milwaukee Journal who in 1965 decided to become a dairy farmer, despite having grown up in Milwaukee and having never farmed.

He moved his family to a farm he bought in Amherst, near Stevens Point, and farmed for 10 years before going into the insurance business.

Rashke, who died in 2012, discovered an overlooked section of the tax code — Section 105 — that allowed sole proprietors to deduct the cost of health insurance for an employee, giving them the same tax savings enjoyed by incorporated businesses and their employees.

It could be done by setting up a health reimbursement account of sorts for a spouse, such as a farmer’s wife, and her dependents, including her husband.

“Section 105 had been on the books since the 1950s and nobody had figured out what to do with it,” said Bruce Stein, a TASC spokesman.

The insight led to the insurance agency's offering the AgriPlan and BizPlan in 1986.

Some time would pass, however, before the products caught on.

Dan Rashke, 51, who joined his father in 1983 as a part-time salesman, remembers moving the business to Madison in 1987 in a 22-foot U-Haul truck that was half filled with the furniture from his apartment.

The company at the time consisted of four people, including his father and him.

Around 1990, the company stopped selling insurance and focused on administering the plans. It struggled, and the company came close to filing for bankruptcy.

Then the AgriPlan began to take off. By 1995, revenue had hit $4 million a year, and the company, known at the time as Insurance Center Administrators, changed its name to TASC.

TASC initially sold a software package to certified public accounts to administer employee benefits, mainly flexible spending accounts, Rashke said. But around 2000, it realized that the internet would enable it to provide services to customers throughout the country and that insurance brokers could sell the services.

It began to add services for other employee benefits, some picked up through acquisitions.

By 2006, the company had revenue of $22.6 million and 220 employees. Last year, it reached $96.5 million.

Much of the growth has come from acquisitions: TASC has done almost 50 in its history.

“That’s what you are seeing right now — just a huge consolidation in the industry,” Stein said.

Most are small, third-party administrators. A typical acquisition may be a company with $2 million in revenue and 15 employees. The largest had $10 million in revenue and 100 employees.

TASC has a policy of keeping all the employees, which helps make it an appealing buyer.

“It is a big selling point for these small shops,” Stein said. “They have relationships with these people.”

About 40% of the company's employees work remotely, most of them from their homes.

TASC can manage a smaller company's book of business at a lower cost because of its significant investment in information technology over the years.

Rashke likens the company's information technology systems to the machine tooling in a factory. Unlike a factory, though, TASC can increase production at minimal additional cost.

By offering more services, the company’s costs per transaction go down, he said. That in turn brings in more cash that can be used for acquisitions.

The rising cost of providing health benefits over the past 20 years also has helped drive the demand for TASC’s services. The increase in health plans with high deductibles must be tracked, for instance. In addition, more employers are offering health reimbursement accounts that must be administered.

In all, TASC administers an estimated $1.8 billion in transactions a year.

The company now has the information technology infrastructure to bid on big accounts.

It recently won a $57 million, five-year contract from the federal government to administer a charitable giving plan for federal employees.

The company will administer the payroll deductions for the roughly 600,000 federal employees who participate in the campaign and will disburse the money to more than 20,000 charities.

Such rapid growth comes with major challenges, but Rashke — who acknowledges that he regularly gets offers to sell the company — has come to accept that.

“You have to accept the fact that if you are growing, you are not going to be comfortable,” he said.