What characteristic is essential for a successful self-funded plan?

A successful self-funded plan relies heavily on the expertise and services provided by a third-party administrator (TPA) for claims servicing. Self-funding means that an employer assumes direct responsibility for paying claims, rather than purchasing an insurance policy. In this setup, a TPA plays a crucial role in managing and processing claims efficiently. They provide the necessary administrative infrastructure, which includes claims processing, network management, and compliance with regulatory requirements. This allows employers to focus on other aspects of their business while ensuring their employees receive the care they need without the administrative burden falling solely on them.

Utilizing a TPA also allows employers to leverage actuarial data and expertise in managing health care costs effectively, thus providing a structure that helps in budgeting and managing risks associated with self-funding. This arrangement enhances the overall success and sustainability of the self-funded plan.