Question

An employer has decided to implement a self-funded plan. The company will pay the claims, but an insurer will administer the actual plan. What kind of contract is this?

Answer 1

An employer self-funding their healthcare plan with administration by an insurer is using an administrative services only (ASO) contract. The employer bears the financial risk, while the insurer manages administrative duties.

Step-by-step explanation:

The contract described is known as an administrative services only (ASO) contract, where an employer self-funds the healthcare plan but outsources the administration to an insurance company. This setup often helps employers to save on healthcare costs, while still providing benefits to their employees.

It differs from regular employment-based insurance because the employer assumes the financial risk for providing health care benefits to its employees. The insurer, in this case, handles claims processing and other administrative tasks.