Which statement is true regarding self-insured groups?

Which statement is true regarding self-insured groups?

• A. One of the members of a self-insured group usually provides administrative services.
• B. Self-insured groups are for-profit entities.
• C. Only members that experience losses can be assessed to fund shortages.
• D. Self-insured groups are usually not covered by state guaranty funds.

Answer: (D)

Self-insured groups fund workers’ compensation obligations from employer reserves and typically use a dedicated administrator or third‑party administrator to handle claims and related services rather than relying on a member to provide administration. Because these groups are not insurance policies issued by an insurer, they generally aren’t covered by state guaranty funds, which exist to protect insured policyholders if an insurer becomes insolvent. This is why the statement about guaranty funds being unavailable to self-insured groups is true. The other points aren’t consistently accurate: administration is usually handled by a TPA rather than a member, the structure can be either for‑profit or not‑for‑profit, and funding shortfalls are typically covered by assessments across all members, not just those with losses.

Self-insured groups fund workers’ compensation obligations from employer reserves and typically use a dedicated administrator or third‑party administrator to handle claims and related services rather than relying on a member to provide administration. Because these groups are not insurance policies issued by an insurer, they generally aren’t covered by state guaranty funds, which exist to protect insured policyholders if an insurer becomes insolvent. This is why the statement about guaranty funds being unavailable to self-insured groups is true. The other points aren’t consistently accurate: administration is usually handled by a TPA rather than a member, the structure can be either for‑profit or not‑for‑profit, and funding shortfalls are typically covered by assessments across all members, not just those with losses.