What is a primary requirement for a plan to be classified as self-funded?

For a plan to be classified as self-funded, it must be able to support its own risk by having a large enough group. This ensures that the costs associated with claims can be adequately covered by the premiums collected from participants. A self-funded plan means that the employer assumes the financial risk for providing healthcare benefits to its employees instead of purchasing a fully insured plan from an insurance company. By having a larger group, the risk associated with high-cost claims is spread out among more individuals, which stabilizes costs and allows the employer to manage their healthcare expenses more effectively.

In contrast, options regarding complete dependency on external funding sources would contradict the principles of self-funding, which relies on internal resources. Enrollment limited to family members does not inherently meet the criteria for self-funding; the group size and risk pooling capabilities are paramount. Lastly, requiring all members to have prior health insurance does not relate to the self-funding classification but more to eligibility or coverage requirements. Thus, the need for a sufficiently large group is essential to ensure that a self-funded plan is viable and sustainable.