Third Party Benefits Administrators Basics
Get to know what third party benefits administrators can do for your company
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.
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.
Try: 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.
Try: 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.
Try: 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.
- 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.
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