What is TPA or a Third Party Administrator?
In brief, a TPA or Third Party Administrator is a business that handles the claims, processing, and reporting components of an employee and retiree benefits plan. But in order to better understand TPA or third party administration, let’s first address what it is in context of self-funding an employee benefit plan.
What is self-funding?
In self-funding, employers underwrite the risk and act as their own insurance company. In return for accepting greater risk, employers aim to reduce costs. Self-funding also lets employers gain more flexibility and insight in regard to their coverage. They can more fully understand how each claim dollar is spent with more detailed, customized, and timely reporting. Employers can respond to changing coverage needs more quickly. A self-funded employer is often better equipped to control costs by decreasing operational fees while gaining tax savings.
What is stop-loss?
A self-funded employer will only want to assume a tolerable amount of risk. The balance of risk can be transferred to a stop-loss reinsurance policy. This helps guard against the unknown. Varipro offers deep knowledge and insights of the stop loss markets. We can help you through the often confusing process of securing stop loss coverage. Varipro maintains longstanding relationships with National (US) reinsurance carriers with the highest ratings and reliability. Many levels of Specific and Aggregate coverage are available depending on your business needs, claim history, and risk tolerance levels. Get a competitive rate for your group.
So what does a Third Party Administrator (TPA) do?
A self-funded employer will often partner with a third-party administrator (TPA). The TPA can take care of tasks like enrollment, claim processing, premium collection, COBRA notifications, utilization reporting, and more. Because Third Party Administrators specialize in benefits administration, they are more cost effective and responsive than in-house processing. A sole focus on benefits administration lets a TPA keep their clients informed about utilization and compliance issues.