Simply put, this is a program that allows employers to self-insure the benefits and only purchase the administrative services from the insurance provider. These services can include, but are not limited to the following:

• Preparation of an administration manual
• Communication with employees
• Determination and payment of benefits
• Preparation of government reports
• Preparation of summary plan descriptions

Typically, organizations with this type of product also purchase stop-loss insurance to protect themselves against catastrophic losses.