During the first three years, the SI plan must be administered by which entity?

• A. Insurance Company
• B. Public Authority
• C. Third-Party Administrator
• D. Self-administered

Answer: (C)

The key idea is who handles day-to-day administration of a California Self-Insurance Plan in the early years. A third-party administrator is used because the plan needs specialized, independent claims handling, medical management, and regulatory reporting that the employer may not yet have the resources or systems to manage in-house. The TPA processes and settles claims, controls costs, and ensures compliance with state regulations on behalf of the self-insurer during that initial period. After the first three years, the employer may take over administration if it demonstrates the capability, but the initial requirement is to rely on a TPA.