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.