ABC Company funds claims in house but uses EFG Company as the liaison between the employees and ABC Company. EFG Company makes sure that the plan runs smoothly for ABC Company. What type of arrangement would this be?

Question

Quizplus · Accepted Answer

The arrangement for EFG Company to act as liaison between ABC Company and its employees, and to be sure the plan runs smoothly would be a third-party administrator relationship. EFG Company acts as a sponsor that develops the plan, sets underwriting rules, and administers the plan. ABC Company will fund claims as self-insured under the guidance of EFG Company.
Theory

ABC Company Funds Claims in House but Uses EFG Company