Which funding arrangement allows an employer to select a deductible and pay covered expenses directly?

The correct response pertains to shared funding, which is a funding arrangement that allows an employer to select a deductible and directly pay for covered expenses. In a shared funding setup, the employer typically covers the claims up to a certain amount (the deductible) while also sharing the risk with the insurance carrier. This means the employer retains some financial responsibility, yet benefits from the insurer’s financial backing for expenses exceeding the deductible. This hybrid approach enables employers to control their healthcare spending while providing insurance benefits to their employees.

In contrast, the other options do not fit this specific description. A minimum premium arrangement involves the employer paying a premium that covers only a part of the expected losses, with the insurer covering claims above that amount, offering less flexibility in deductible choice. The retrospective premium arrangement is based on actual claims experience, where the final amount of the premium is adjusted based on claims incurred, making it less about upfront deductibles. Noncontributory health insurance means that the employer pays the entire premium with no contribution from employees, which does not allow for the selection of deductibles or direct payment of covered expenses based on an employer's choice.

Understanding these distinctions helps clarify how shared funding provides the flexibility and control that employers desire in managing their healthcare costs.