The fee paid by self-insured to cover a stable funding source is based on what?

• A. Payroll
• B. Premiums
• C. Number of employees
• D. Asset value

Answer: (A)

In self‑insurance for workers’ compensation, funding a stable source is built around payroll. Payroll directly reflects the employer’s exposure and potential claim costs—higher wages mean higher potential liabilities—so basing the fee on payroll creates a predictable, scalable foundation for funding the plan. Premiums apply to traditional insured programs, not to a self‑insured setup, so they aren’t the basis here. Counting the number of employees doesn’t capture how much each employee costs in benefits, and asset value isn’t related to ongoing claim liabilities. So payroll is the most appropriate basis for the fee.