Kentucky Health Insurance Practice Exam

An Administrative Services Only (ASO) arrangement is primarily associated with a third-party administrator (TPA). In this context, the TPA manages the administrative tasks of a company's health plan, such as claims processing, member services, and compliance activities, while the employer retains the financial risk for covered claims. This setup allows employers to self-fund their health benefits without having to manage the administrative burdens internally.

In contrast, the other options refer to different concepts in health insurance. While self-funding and TPAs can work together, self-funding is more about the financial responsibility for claims rather than the administrative aspect. A modified fully insured plan involves a mix of self-funding and insurance, which is not the same as an ASO arrangement. Lastly, a modified endowment contract refers to a type of life insurance policy, which does not relate to the administrative services for health insurance. Therefore, the identification of a TPA as the correct term highlights their role in administrative functions within an ASO setting.