What does the self-funded plan provide in terms of insurance coverage?

The self-funded plan provides a method for employers to pay directly for employee benefits, which is why this option is considered correct. In a self-funded arrangement, the employer assumes the financial risk for providing health care benefits to its employees. Rather than paying fixed premiums to an insurance company, an employer allocates funds to cover expected claims and can manage these expenses internally.

This approach offers flexibility for employers, as they can tailor benefits to their workforce's specific needs while potentially saving on costs associated with traditional insurance plans. Additionally, self-funded plans can allow employers to retain any surplus funds if claims are lower than anticipated, effectively allowing them to use those funds for other business needs or future claims.

The other options do not accurately describe the nature of a self-funded plan. Comprehensive insurance for all risks suggests a broader coverage approach typical of fully insured plans, while insurance against catastrophic losses only doesn't capture the full picture of how self-funding operates. State-subsidized health plans refer to programs that rely on government funding rather than employer-provided benefits, which further distinguishes them from self-funded plans.