Switching to self-funded insurance is a great choice that many other employers are choosing. One of the things you need to consider when switching to self-funding is whether you should employ a third-party administrator (TPA).
What Is A Third-Party Administrator?
A third-party administrator is a company that provides claims processing and employee benefits management services to employers who offer self-funded insurance. Many self-insured companies employ third-party administrators to help them manage their employees’ health insurance without the need to hire additional manpower.
What Do TPAs Do?
Third-party administrators serve as the bridge between self-funding companies and insurance providers. However, they also provide a full range of services related to administering insurance.
1. Enroll employees and their dependents in plans
2. Prepare necessary plan documents
3. Monitor and implement legislative updates
4. Perform compliance testing to ensure compliance to IRS
5. File Form 5500
6. Design and implement your plan benefits
7. Process plan distributions and loans
8. Coordinate with healthcare providers
9. Process employees’ insurance claims
10. Prepare plan fee disclosures according to Department of Labor rules
Why You Need A TPA
Take Advantage Of Administrative Expertise
Managing a benefit plan is a complicated endeavor that requires knowledge of rules and regulations. Failure to comply will result in penalties. With a TPA, you will have someone who knows the in-and-out of regulations. Furthermore, they have experience administering and managing group plans so claims processing will go smoothly for your employees, too.
Have Access To The Best Insurer
TPAs with years of experience in their belts are also well-connected in the industry. Working with a TPA will give you access to a wide range of insurers so you can take your pick. This way, you can identify the best company for each insurance program you offer.
Design And Implement Comprehensive Benefits
Most employers’ goal in becoming self-funded is to provide comprehensive benefits for their employees. To do this, you need to take into account your employees’ needs, find providers, set a budget, set up a Stop-Loss Protection, and so on. You need someone you can trust will balance yours and your employees’ best interest in designing a benefits plan. A TPA will help you come up with a benefits plan that will truly benefit the company and its employees.
Low Admin Costs
As mentioned earlier, switching to self-funding involves a lot of administrative and legal work that your HR personnel are probably not familiar with, and which they cannot perform alongside their HR roles. Some companies may have found themselves hiring additional personnel specifically to administer the company’s insurance. The recruitment process, their salary, benefits, and operational costs may be higher than the cost of simply hiring a TPA.
Better Customer Service
TPAs provide a specific service meant to bridge the gap between self-funded companies and insurance providers. As a result, TPAs can offer unparalleled flexibility in accommodating your company’s needs.
Find The Right Third-Party Administrator
A third-party administrator will guide you through the processes and technical aspects of providing a self-funded health plan in. Your TPA should understand your company’s priorities and needs to help you achieve your goals. Contact National Insurance Partners Inc., for more info.