Which option best describes how group self-insurance groups operate?

• A. They operate as a single employer policy
• B. They rely on state fund
• C. They pool risks from several employers to self-fund claims
• D. They insure only medical benefits

Answer: (C)

Group self-insurance groups operate by pooling the workers’ compensation obligations of several employers into a single self-funded fund. Instead of buying a traditional insurance policy, each member contributes to the pool and, together, they pay the claims arising from work-related injuries. The group typically uses a third-party administrator to handle claim management, and they often purchase stop-loss coverage to cap individual or aggregate exposure. This arrangement is overseen by state rules and the plan documents, but the financial risk sits with the pool rather than with a single employer. Because it pools multiple employers and covers the full workers’ compensation benefit spectrum (medical and indemnity), it is not a single-employer policy, not funded by a state fund, and not limited to medical benefits.