Question 1

What does a third-party administrator (TPA) do for a self-funded health plan?

Accepted Answer

A TPA administers a self-funded health plan on behalf of the employer. Core TPA functions include: claims processing and payment, eligibility and enrollment management, network access (PPO or reference-based pricing), member ID cards and customer service, COBRA administration, utilization management, and regulatory reporting. The TPA is the operational backbone of a self-funded plan — the employer assumes financial risk, but the TPA handles day-to-day administration.

Question 2

How do I compare TPAs for my self-funded plan?

Accepted Answer

Compare TPAs on: claims processing accuracy (target 95%+) and speed (target 10-day turnaround), network access and discounts, technology platform quality (member portal, employer reporting, data analytics), customer service metrics, ERISA compliance support, stop-loss carrier relationships, and total fee transparency. Request a demo of the member portal and employer reporting tools. Ask for references from employers of similar size and industry.

Question 3

What are typical TPA fees for self-funded health plans?

Accepted Answer

TPA fees typically range from $15–$40 per employee per month (PEPM), depending on plan size, services included, and network access. Larger employers (500+ employees) typically pay $15–$25 PEPM; smaller employers pay $25–$40 PEPM. Some TPAs charge additional fees for specific services (COBRA administration, dependent eligibility audits, utilization management). Always request an all-in fee quote to compare TPAs on a total cost basis.

Question 4

What is the difference between a regional TPA and a national TPA?

Accepted Answer

National TPAs (Meritain, Allied Benefit Systems, Trustmark, CoreSource) have broad geographic coverage, established network relationships, and standardized technology platforms. Regional TPAs often have deeper local market knowledge, more personalized service, and stronger relationships with regional hospital systems. For multi-state employers, national TPAs are typically preferred for network breadth. For single-state or regional employers, a regional TPA may offer better service and local network relationships.

Question 5

How often should employers review their TPA relationship?

Accepted Answer

Conduct a formal TPA performance review annually, evaluating claims accuracy, turnaround time, customer service metrics, and cost trends. Issue a TPA RFP every 3–5 years to ensure competitive pricing and service quality. Switching TPAs is disruptive (typically 6–9 months to implement), so the bar for switching should be high — but staying with an underperforming TPA costs more in the long run through poor claims management and missed cost-containment opportunities.

Third-Party Administrator (TPA) Profiles

Key evaluation criteria for TPAs

TPA diligence scorecard

Claims operations

Reporting depth

Fee transparency

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