What characterizes the Self-Funded Model of health coverage?

The Self-Funded Model of health coverage is characterized by a scenario where employers take on the financial risk of providing health care benefits to their employees. In this model, the employer pays for all health care costs directly rather than transferring this risk to a traditional insurance company. This often involves employees making out-of-pocket payments for certain medical expenses, which are then reimbursed by the employer according to the specific health plan provisions.

By opting for self-funding, employers can save on premium costs and gain more control over their health benefits budget. This model allows for flexibility in designing coverage options and can lead to cost savings for both employers and employees, depending on the actual healthcare usage.

Understanding this context of self-funding helps clarify why out-of-pocket payments are a key characteristic, as employees may still bear some upfront costs before benefits apply. The other options describe different types of health coverage arrangements that do not align with the self-funded model.