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What is a Third Party Administrator (TPA)?
A TPA is an organization that handles the operational and administrative duties of an employee benefits plan and is different from an insurer. They are experts in benefits administration and can work with Insurers to provide benefits coverage and more personal service. TPAs were created to fill a gap in the insurance marketplace where administration needs were growing more complex (specialized employee eligibility requirements, hour bank systems, etc.).
How is a Third Party Administrator Different from an Insurer?
- TPAs generally only take on certain functions and don’t usually have products of their own (more on that below). This allows additional flexibility in coverage and tailored solutions rather than typical offerings from Insurers.
- TPAs are well-known for providing greater, more personal levels of customer service.
Benefits of Using a TPA
1. Get access to years and years of benefits knowledge and expertise via streamlined administration to make procedures easier with set-up plans for every requirement. Moreover, the line for professional communication with the TPA team to help you navigate the complexities of the group insurance industry.
2. Save time and money by benefit pooling, making it cheaper for everyone. This covers both small and large claims effectively and smaller companies get access to similar group pooling rates as larger companies do with TPA. One other benefit TPA might bring to your system is an already-made functional online system that can eliminate the need for building an internal communication system yourself. When it’s the end of the month, TPA removes the hassle of dealing with different invoices from different carriers yourself by compiling everything into one neat invoice each month.
3. Flexible plan options with customizable plans including Critical Illness or Diagnostic Specialist Access Insurance (DSAI), multiple carrier options for each benefit line and different funding arrangements.
4. Claim processing support for multiple types of claims, including difficult or denied claims, disability claims and life claims.
All in all, a TPA can help small businesses tremendously with all workflows regarding health benefit plans for their employees. With so many advantages, it’s a winning strategy you can’t afford to miss out on!
