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What is a Third Party Administrator (TPA)?
The Texas Department of Insurance defines a TPA as a person who collects premiums or contributions from, or who adjusts or settles claims in connection with life, health and accident benefits or annuities for residents of this state, but the term does not include those persons to the extent their operations are excluded or exempted in Article 21 of the Insurance Code.
How are TPAs Regulated?
TPAs must obtain a Certificate of Authority from the Texas Department of Insurance before conducting business in Texas. Licensing requirements and certain exemptions for TPAs can be found in the Texas Insurance Code, Article 21.07-6; and certain rules governing TPA are found in the Texas Administrative Code.
TPAs are also regulated by various Federal agencies including the Department of Labor, Health Care Financing Administration, and the US Department of Health and Human Services. Some of the Federal laws affecting TPAs include ERISA, COBRA, OBRA, HIPAA, and the ADA.
What Types of Plans do TPAs Administer?
Health & Welfare Benefit Plans which may be Fully Insured or Self Insured, Section 125 Cafeteria Plans, Pharmacy Benefit Plans, Single Employer Plans, Multiple Employer Plans, Taft-Hartley Plans, Workers Compensation Plans, Property & Casualty Programs, Retirement Benefit Plans such as Pension or Profit Sharing and more.
The TPA’s Role
TPAs specialize in assisting Plan Sponsors with the design, implementation, and day-to-day administration of employee benefit plans. Self-insurance has become an increasingly popular funding method for client sponsored plans and employers have turned to TPAs and their administrative expertise for a variety of reasons. TPAs tend to be more personal, flexible, and efficient than insurance companies and provide a high level of client satisfaction. The TPA provides billing and eligibility services, employee communications, claims processing, retention of records, and financial reporting. TPAs interact with reinsurance carriers, medical provider networks, agents & brokers, actuarial, legal and tax professionals, and other vendors providing services for the plan.
TPAs and Their Relationships
Much like the role of a trusted advisor, the TPA develops strong relationships with the clients they serve. The relations between TPA and their clients are ongoing, closely involved and generally long term in nature. To facilitate the needs of the employer sponsored plan the TPA must also work diligently with plan participants and medical providers to process benefit payments in a timely and accurate manner. A spirit of cooperation between the parties exists in an effort to efficiently deliver the benefits of the plan in a fair and prudent fashion.
Mission Statement
The Mission of the Texas Association of Benefit Administrators (TABA) is to serve the business needs of owners and executives of third party benefit administration companies engaged in providing services in Texas and to further the advancement of the third party benefit administrators profession.
Association Bylaws |
