Question

Third-party administration has become fairly common in accident and health insurance due to the growth of:

A) Government regulation.
B) Traditional insurance providers.
C) Self-funded employee benefit plans.
D) International markets.

Answer 1

Third-party administration in health insurance has become common due to the increase of self-funded employee benefit plans, often managed by employers trying to navigate the complexities of the healthcare system, especially after the implementation of the Affordable Care Act. The answer is option C.

Step-by-step explanation:

The growth of self-funded employee benefit plans is a significant factor that has made third-party administration fairly common in accident and health insurance. As small businesses often do not provide health insurance and many lower-paying jobs do not include it, there is an increase in self-funded plans where the employer assumes the financial risk for providing health care benefits to its employees.

To manage these plans, employers turn to third-party administrators. The Patient Protection and Affordable Care Act (ACA) has also influenced this market by mandating that all Americans have health insurance and preventing providers from denying coverage based on preexisting conditions, further stressing the importance of efficient management of health insurance plans.