The Harp Company self-funds the health plan for its employees. The plan is administered under a typical administrative-services-only (ASO) arrangement. One true statement about this ASO arrangement is that

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Under an ASO arrangement, the employer funds the health plan and contracts with an administrator to provide services such as claims processing and network management. The amount paid to the administrator is not considered insurance premiums and is therefore not subject to state premium taxes. Choice A is incorrect because ASO arrangements do not prevent an employer from purchasing stop-loss coverage. Choice C is incorrect because the administrator does not pay claims from its own assets, but instead uses the employer's funds to pay claims. Choice D is incorrect because the charges for ASO services may be stated in various ways and are not required to be a percentage of claims paid.

The Harp Company Self-Funds the Health Plan for Its Employees