Which plan is funded by an employer and typically administered by a health insurance company?

Which plan is funded by an employer and typically administered by a health insurance company?

• A. Self-funded Health Insurance Plan
• B. POS
• C. HDHP
• D. Conventional Indemnity Plan

Answer: (A)

In this scenario, the defining idea is who carries the financial risk and how the plan is funded. A self-funded (self-insured) health plan uses the employer’s own funds to pay employee medical claims, rather than paying fixed premiums to an insurance company. The employer still organizes the plan’s administration—claims processing, provider networks, and plan rules—often by contracting a third-party administrator or an insurance company to handle these services. So the employer funds the benefits directly, while administration is typically handled by an insurer or administrator. This contrasts with traditional insured plans, where the insurance carrier collects premiums and bears the claims risk. The other plan types described generally involve premiums and coverage managed through an insurer under a fixed benefit structure, rather than the employer directly funding the claims.

In this scenario, the defining idea is who carries the financial risk and how the plan is funded. A self-funded (self-insured) health plan uses the employer’s own funds to pay employee medical claims, rather than paying fixed premiums to an insurance company. The employer still organizes the plan’s administration—claims processing, provider networks, and plan rules—often by contracting a third-party administrator or an insurance company to handle these services. So the employer funds the benefits directly, while administration is typically handled by an insurer or administrator.

This contrasts with traditional insured plans, where the insurance carrier collects premiums and bears the claims risk. The other plan types described generally involve premiums and coverage managed through an insurer under a fixed benefit structure, rather than the employer directly funding the claims.