Massachusetts Health & Accident Insurance Practice Exam

What do employers achieve through a minimum premium arrangement?

1. Access to exclusive insurance products

2. Complete risk transfer to insurers

3. Control over routine claims costs

4. Elimination of administrative responsibilities

The correct answer is: Control over routine claims costs

Employers achieve control over routine claims costs through a minimum premium arrangement. This type of arrangement allows employers to take a proactive approach to managing their health and accident insurance expenses. They pay a minimum premium to the insurance company while retaining a certain level of risk for smaller claims, rather than transferring the entire risk to the insurer. By maintaining this control, employers can closely monitor claims and implement cost-saving measures, which can lead to lower overall costs in the long run. This arrangement often incentivizes employers to foster a healthier work environment and encourage employees to utilize preventive care, which can further drive down claims costs. The other options do not accurately reflect the primary benefit of a minimum premium arrangement. Employers may not necessarily gain access to exclusive insurance products or completely transfer risk to insurers, as they still retain some level of responsibility for smaller claims. While administrative responsibilities can vary, this arrangement does not inherently eliminate them.