70. Some employers want to provide their own coverage but do not have the staff or expertise to administer the coverage. What option is available?
Answer: D
Employers can establish a self-funded/self-insured plan and hire a third-party administrator.
This option allows employers to take control of their health coverage while leveraging external expertise for administration. By hiring a third-party administrator, they can effectively manage the plan without needing in-house staff.
A) establish an individual policy for each employee
This option is impractical for employers seeking to provide coverage for multiple employees as it would be logistically challenging and costly. Individual policies do not allow for pooled risk, which is a significant advantage of group insurance plans.
B) establish a fully insured, self-administered plan
This option is contradictory because a fully insured plan typically does not allow for self-administration. Fully insured plans are managed by insurance companies, where the employer pays a premium and the insurer takes on the risk, negating the need for administrative staff.
C) establish a fully insured plan and hire a third-party administrator
While this option may seem viable, fully insured plans are managed by insurance companies, rendering the role of a third-party administrator unnecessary. The insurance company handles claims and administrative tasks, so this does not address the employer's need for self-administration.
D) establish a self-funded/self-insured plan and hire a third-party administrator
This is the most suitable option as it allows employers to self-fund their coverage while outsourcing administrative tasks to a third-party administrator. This approach provides flexibility and control over benefits while drawing on external expertise to manage the plan effectively.
Conclusion
The correct answer, establishing a self-funded/self-insured plan and hiring a third-party administrator, meets the needs of employers who wish to retain control over their coverage without the burden of administrative responsibilities. Other options either do not address the employer's requirements or are not feasible in a practical context.