Third party benefit administrators are of great use to companies when the resources aren’t available in-house. They run the gamut from negotiating with insurance companies to managing all aspects of your benefit adminstration, freeing up your company to focus on what matters most, the bottom line.

With so many insurance rules and regulations involved with benefit administration, like HIPAA and COBRA, outsourcing your benefits to a plan administrator can protect you from sticky situations these laws create because they're experts on the federal guidelines that drive insurance programs. Using 3rd party HR benefits administrators allows your HR department to spend more time and energy on recruiting, employee issues, retention and other HR-related tasks.

Consider making the most of third party benefits administrators by:

1. Utilizing a third party benefits administrator to negotiate with insurance companies.

2. Employing their products and services to orientate, train and sign up your employees with benefits and renewals.

3. Managing all aspects of your benefits administration from initial set up and maintenance with ongoing reports to managing eligibility and COBRA deadlines for you to claims adjudication.

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Use 3rd party benefits providers to negotiate with insurance companies

A third party administrator (TPA) works to obtain annual renewal quotes for your company from various insurance companies to get you the best bang for your buck, simplifying the work involved for you. They have the negotiating skills and expertise necessary to handle this difficult and mundane task.

I recommend: Employee Benefit Administrators (EBA) is a full service benefit broker offering a wide range of consulting services in health insurance, flexible spending and medical reimbursement accounts, complete health insurance packages, COBRA administration and more. Partnering with leading insurance companies like Blue Cross Blue Shield, Aetna, Guardian and Met Life, EBA can negotiate the best rates possible for your company and your employees. Colonial Healthcare works with you coordinating renewal negotiations with leading insurance providers. Look to Paragon Business Services if you're a smaller company, as they negotiate with health insurance providers to offer your company coverages often only larger corporations can afford.

Empower employees to manage their own benefits with tools offered by a benefits administrator

HR professionals are constantly putting out fires and with so little time on hand, outsourcing the tedious task of explaining your company's benefit packages allows your HR department more time to handle more strategic HR initiatives at hand. Third party administrators offer resources to help employees manage all aspects of their benefits (from signing and renewals to claim processing) quickly and easily. Since this is their specialty, they can answer difficult questions that can sometimes bog HR departments down because of the laws involved. You may also find third party benefit administrators will come directly to your office to coordinate renewals and benefit Q and A sessions with your employees.

I recommend: Benefit Concepts provides online tools to help employees manage their benefit plans and offers phone and online support to answer benefit questions your employees have. AmCheck has an employee hotline to answer your employees benefit questions in addition to other managing tools. Enwisen's communication tools and software empowers employees to manage their own benefits, anytime, anywhere.

Hire a third party benefits administrator to manage all aspects of your company's benefits

Third party benefits management includes many detailed tasks from paperwork like reporting, billing, issuing id cards and plan building to eligibility management on new hires to claims adjudication. Free your HR department up of these time consuming tasks by outsourcing to a TPA.

I recommend: Select Benefit Administrators provides complete third party administrator services that include a variety of solutions from problem resolution on administrative functions to resolving medical, dental, Section 125, COBRA and other claim issues with employees. In addition, they manage new hire eligibility, providing useful reports to help you stay on top of all benefit administration issues. Administaff is another full service third party administration provider handling all aspects of managing employee benefits.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  When meeting with 3rd party benefits administrators, obtain as much information as you need. The provider should answer even your most basic questions, leaving you with little doubt that they can communicate efficiently with you, your employees and other management staff.

There are many reasons why companies turn to Third Party Administrators (TPAs). Third party administrators can free up an overwhelmed benefits administration process for the human resource department. They can also shift the enormous amount of paperwork involved in processing claims. Third party benefits providers offer solution packages tailored to meet the demands of group health plans and disability insurance. And, finally, a TPA acts as a liaison to the company.

Third party benefits administrators offer support staff via claim representatives, online tools and employee kiosks. The claims adjuster understands the legal specificity of the insurer and processes claims for the employer. Hence, the relationship is akin to a Certified Public Account or attorney on retainer; the consequence of decisions made on behalf of the employer rest solely on the shoulder’s of the business.

Establishing a contract with third party benefits administrators hinges on a particular set of circumstances:

1. You need an average of 400 enrolled participants to achieve cost saving with 3rd party benefits administrators.

2. You must offer an employee benefit package that includes self-funded group health plan, disability insurance and/or pensions conducive to third party administration.

3. You'll need to set aside a dedicated budget to manage cash flow necessary to secure third party HR benefits administrators.

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Locate a reputable licensed TPA benefits provider

Consider making a list of licensed 3rd party benefits providers. Using a third party admin without it is risky.

I recommend: Goliath, a provider of business knowledge on demand, offers a host of business resources including an additional directory of business journals, a newsletter and online courses. Wolcott & Associates is an industry leader in benefits consulting and auditing services and will perform audits on TPA companies under consideration for a fee. For a small business solution, in-house 3rd party benefits administration RepayMe hosts reimbursement plan software with real-time debit card option.

Request a comprehensive proposal

Ask for a written proposal before signing a contract with a third party benefits administrator. Assess provisions to cover costs, use of employee friendly process systems and efficient benefits administration services.

I recommend: Health Care Administrators Association (HCAA) has a TPA university that holds conferences on issue relevant to 3rd party benefits administration. iEmployee has a free product demonstration available for online benefits enrollment.

Require TPA financial history, claim audit report and licensing documentation

Confirm financial stability and tested administration reliability. The business of a third party benefits administrator can be lucrative; some businesses have fallen prey to unscrupulous providers.

I recommend: Gallagher Benefits Services, Inc. provides a webinar on benefit services and group health plans. HRXCEL offers an informative presentation on benefits administration outsourcing solutions. CRS Licensing, LLC is a knowledgeable compliance and research servicing company with extensive experience.

Confirm the TPAs familiarity with governmental regulations and 3rd party administrative law

Consult industry experts in the field of risk management and general commercial liability. An important aspect of doing business with a third party benefits administrator is the legal consequences of outsourcing the work to a third party.

I recommend: Victor O. Schinnerer & Company, Inc. provides interactive 24-hour insurance news update from Insurance Journal. AON specializes in risk management, reinsurance and human capital consulting.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Inquire if the third party benefits administrator has submitted to a SAS-70 audit.
• •  Substantiate the period involved in paying claims, payment confirmation systems and utilization review services.
• •  Set up an informational presentation with 3rd party benefit provider's liaison. Obtain business references and contact existing and past clients for feedback.

Third party administrators (TPAs) are companies that provide comprehensive benefits administration and management services to employer plans, or consulting or specialty benefits and insurance firms that offer a few services. Over 50% of companies outsource to TPAs mainly because of the complexity involved in administering benefit plans to employees. There are many to choose from, so it's important to understand what one can do for your company.

Benefits administrators offer management and consulting services, which can include software to help simplify the work at hand for an HR department. Some specialize in 401k, profit sharing and retirement planning, while other TPAs focus primarily on working with the employer administering health insurance plans. Outsourcing to a third party benefits administrator can streamline your HR process, making it run more efficiently.

Here’s what to consider when learning about third party benefits administrators basics:

1. Familiarize yourself with the types of 3rd party benefits administrators available.

2. Evaluate whether a benefits administrator is right for your company and the various functions they perform.

3. Take advantage of third party administrator management services and maximize your HR department's ROI.

Action Steps
The best contacts and resources to help you get it done

Get to know the types of 3rd party benefits providers in the marketplace

Third party administrators offer a variety of services to small, mid- and large-size companies including negotiating available health insurance programs and services, 401k plans and other health and life-related coverages. TPAs can be small, privately-owned law firms managing your insurance and payroll to larger corporations that offer complete HR services, often called Professional Employer Organizations or PEOs. Outsourcing these tasks reduces the administrative burden on your HR staff, giving them more time to look into other initiatives.

I recommend: Read over what a third party benefits administrator is, what types are available to you, how they got started and more at the Society of Professional Benefits Administrators (SPBA) website. The Princeton Review sums up what a typical benefits administrator does and gives insight into the knowledge one must have for this field.

Evaluate whether a 3rd party administrator is right for you

Third party administrators provide a variety of HR services including negotiating with insurance companies, managing renewals and new hire eligibility, claim processing, communicating benefit packages to employees and more. TPAs also sort through the new laws and regulations introduced every year that impact benefit plans or employers sponsoring these plans; legal issues and jargon that can bog an HR department down. In order to maximize a TPA's services, first identify whether one is needed for your particular operation.

I recommend: Read an article at BuyerZone to see whether outsourcing to a benefits administrator is right for your business. Review an article on SPBA's website on choosing and evaluating TPA services.

Consider employing a full service TPA firm for maximum efficiency and ROI

Full service TPAs, often called PEOs because they facilitate and manage all of your HR needs, can maximize your HR department's efficiency when you just don't have the resources necessary in-house. In addition, 3rd party administrators are experts on everything HR, from payroll and health insurance to retention and training to federal laws that impact benefits and more. It's wise to consider one if you're always struggling to stay on top of the many demands these issues impress on your department.

I recommend: Subscribe to a free report from Centripetal Consulting to gain an understanding of the difference between outsourcing to a PEO or handling your benefits administration in-house. Use the AllOptions' database to search and compare rates on 3rd party administrators and full service PEOs.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  If you're a smaller employer, consider a law firm or CPA over a larger TPA or PEO to handle your benefits administration and save on cost. Smaller firms have the added benefit of giving you and your employees more personal attention, too.
• •  When evaluating TPAs, check into whether their services provide software solutions as well. Some of the bigger companies offer their own products, which may not necessarily be something you want if you already have a software in place. Ask them if you're able to integrate your software with their services rather than using their product, saving you on cost.

A third party administrator (TPA) performs certain services for self-insured companies. A self-insured company is one that pays employee medical claims out of its own company funds instead of contracting with an insurance company. The type of services offered by a third party administrator depends on whether it is contracted to perform administrative services only (known as an ASO contract) or whether it has full-service capabilities.

Here are some key terms that describe services provided by full-service TPAs.

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Stop-loss insurance administration

Stop-loss is a type of reinsurance-insurance that helps protect a company against extremely high-cost claims. Stop-loss insurance can be aggregate (when total claims reach a certain dollar limit), or it may be specific, pertaining to individual high-cost claims.

I recommend: To learn more about stop loss insurance, visit 360 Degrees of Financial Literacy.

Subrogation

Subrogation means that the insurer has the right to collect any money from the injured person that the lawsuit awarded them for medical costs. When an insured person receives health care benefits, for example, after a car accident, and then later receives money in a lawsuit related to the accident, some states allow subrogation. Subrogation, simply stated, allows the insurance company to be reimbursed for the medical claims they paid.

I recommend: For more information about subrogation, visit FreeAdvice.com.

Coordination of benefits

When a person is covered by more than one insurance policy, coordination of benefits prevents them from receiving double payments. Using established rules, coordination of benefits determines which company has the primary obligation to pay, and which company has secondary responsibility.

I recommend: You can find more information about coordination of benefits at the FinancialWeb portal.

Utilization review

In utilization review, a nurse determines whether inpatient or outpatient services are medically necessary. Inpatient review may include pre-admission, concurrent, and retrospective reviews as well as discharge planning. Outpatient review focuses on procedures that are often over-utilized. Other types of utilization review focus on elective procedures such as varicose vein surgery, or diagnostic procedures such as CT scans.

I recommend: You can learn more about inpatient utilization review at the MedCost Benefit Services website.

COBRA administration

COBRA is the federal law that allows former employees and their dependents to continue their healthcare coverage under certain circumstances. COBRA administration is complex and employers must follow strict guidelines. For this reason many companies prefer to outsource their COBRA administration to an experienced TPA.

I recommend: Visit Aflac to learn more about how TPAs administer COBRA.

Flexible spending account administration

There are two types of flexible spending accounts (FSAs). A dependent care FSA allows employees to use pre-tax dollars to pay for childcare or elder care. A healthcare FSA allows the use of pre-tax dollars to pay for healthcare expenses not covered by insurance. IRS regulations for both types of FSAs are strict, and many employers prefer to outsource FSA administration to a TPA.

I recommend: To learn about the tax advantages of flexible spending accounts visit Lesley University.