New private self-insurers shall contract with a TPA for how many years?

• A. Three years
• B. One year
• C. Two years
• D. Five years

Answer: (C)

The key idea is the startup requirement for private self-insurers: they must have a third-party administrator under contract for a fixed initial period. For new private self-insurers, that period is two years. This two-year term provides a stable window during which claims handling, medical management, and regulatory reporting can be properly established and tested while the self-insurer builds internal capabilities. It helps ensure oversight, accuracy of reserves, and smooth administration during the critical early phase. Shorter periods, like one year, don’t give enough time for startup operations to mature; longer periods, such as three or five years, aren’t the specified requirement and can delay the transition to internal administration if the plan intends to move away from a TPA later.