Which of the following statements on self-insured plans is incorrect?

The statement that self-insured plans must participate in community rating for small group plans is incorrect because community rating is typically associated with fully insured plans rather than self-insured plans. Under community rating, insurance premiums are set based on the average cost of care in a given area, rather than the individual health status of the enrollees. Self-insured plans, on the other hand, take on the financial risk for providing health care benefits directly and can tailor their benefits to the specific needs of their employees without having to adhere to community rating regulations.

Self-insured plans can indeed adjudicate their claims in-house, allowing for more control over the claims process and potential cost savings. They are generally subject to fewer regulations compared to fully insured plans, particularly those regulations pertaining to solvency and state insurance mandates. Furthermore, self-insured plans allow for more customization in coverage options, enabling employers to design benefits that closely align with the healthcare needs of their workforce. Therefore, the inclusion of community rating in the operation of self-insured plans is not applicable, making that statement the incorrect one.