A Third-Party Administrator (TPA) is an organization that processes insurance claims or specific aspects of employee benefit plans for other organizations. Using a TPA is a generally a way to outsource claims processing. Employers that self-insure their health insurance benefits often outsource to a TPA. Using a TPA can be a smart business decision whether you want expertise in particular areas or avoid the costs and liabilities of doing it in house. But not always self insured employers need a TPA.
Third party administrators also handle many aspects of other employee benefit plans such as the processing of retirement plans. Most employers who provide health insurance plans use a TPA to handle the administration of flexible spending accounts (F.S.A), health savings accounts (H.S.A) or health reimbursement arrangements (H.R.A.)’s. These funding arrangements have highly specialized features and complicated administration, which makes using the services of a TPA more cost effective than doing the same work in house.
Your health insurance broker should help you evaluate and compare TPA’s to best meet your needs. Often you will want to look for one that offers technology and services that make the transactions as smooth for your workforce as possible. For example can your employees access funds through a debit card or can they use a smart phone app to upload claims?
Spend the time to choose the TPA that has the resources to meet your needs, and that matches your service expectations. After all, the TPA will become the face of your company for claims, which means how they handle them and interact with your employees will be a reflection on your organization.
Need more information on a Third-Party Administrator that is a good fit for you? Ask your Total Benefit Solutions, Inc account manager for direction or recommendations today by contacting us at (215)355-2121.