Third Party Benefits Administrators

Outsource benefit administration for general health plans, disability insurance and risk management

By D. L. Patrick, Freelance Editor and Writer

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.

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.
Try: 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.
Try: 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.
Try: 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.
Try: 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.

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.