Accident & Health FundamentalsQuestion 21 of 315
An employer that pays employee medical claims directly out of its own funds, rather than purchasing a fully insured group policy, is using:
a.A fully insured plan
b.A self-funded (self-insured) plan, often paired with stop-loss/reinsurance
c.A Medicare Advantage plan
d.A guaranteed-renewable individual plan
Explanation
In a self-funded (self-insured) plan, the employer assumes the financial risk for claims and typically buys stop-loss (reinsurance) coverage that caps the employer's exposure per individual claim and on an aggregate annual basis. Self-funded plans are generally governed by ERISA at the federal level.
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