What to Look for in a TPA for Your Flexible Benefits and COBRA Administration

It may seem as if all third-party administrators (TPAs) are essentially the same, but, surprise, they aren’t! A flashy website can make a subpar TPA look and sound great, but what truly matters is how well the TPA does what it is entrusted to do. This article highlights important considerations beyond first appearances when selecting a vendor. Assumptions can be dangerous and costly for your company. Do you know what to look for in a TPA and what questions to ask?

A quality TPA should provide employers with solutions that:

  • Limit liability and avoid lawsuits
  • Help them avoid costly fines and penalties for non-compliance with complex regulations
  • Streamline processes, save time, and provide internal workload relief
  • Manage regulatory changes and related communication
  • Manage employee requests and customer service needs
  • Provide compliant, up-to-date educational resources for employers and employees
  • Ensure safe and proper handling, storage, and reporting of confidential, protected health data

When selecting a TPA, consider the following:

Expertise and Experience

Because flexible benefits and COBRA are subject to frequent updates with legal intricacies, working with subject matter experts is of vital importance. The most reputable TPAs tend to have a close relationship with the Employer’s Counsel of Flexible Compensation (ECFC), a leading non-profit dedicated to maintaining and expanding employee benefit programs on a tax-advantaged basis. It is a good sign if numerous folks at a given TPA have obtained ECFC certification and hold ECFC credentials. Ask questions about the TPA staff, including years of experience, and certifications, especially from the ECFC. Ask how they monitor and communicate with clients about evolving legislation and requirements. 

Compliance

Dig into their compliance ratings and regulatory expertise by asking for their System and Organization Controls (SOC) rating. Only work with a vendor that strictly adheres to IRS rules. There are TPAs that openly promote rule-bending, which doesn’t affect them but can absolutely hurt your company if audited. A quality TPA will likely call attention to their SOC rating and wear it like a badge of honor. A quality TPA will not cave to pressure and will follow IRS guidelines.

Agreements

Look beyond the monthly administration fee. It is common to uncover hidden fees in the fine print of an agreement. Understand exactly what your company will be held responsible for. Be wary of so-called “free” COBRA administration. Does that mean the TPA has no obligation to stay up to date on fast-moving compliance changes or provide help when there’s a dispute? Also, what kind of service can you expect in return for “free” COBRA administration? Are you prepared to shoulder hefty fines from both the IRS and the Department of Labor, not to mention potentially costly lawsuits, if the TPA fails to assume responsibility for everything they should be doing for you? (Note: “Free” is not to be confused with the service fees your broker is paying for.)

Technology and Data Management

Look for a company that uses a reputable platform with software that integrates with yours. A streamlined enrollment process is vital for seamless onboarding. A digital document trail also protects your company and provides proof that deadlines were met. Ask about their claim management software and if data analytics are offered for detailed insight. Request a demo to see how user-friendly the platform really is.   

Customer Service and Account Support

Choose a vendor that prioritizes customer service and has the evidence to prove it. This can vary widely among vendors so check to see if their capabilities will be a good fit for your company. Ask them to walk you through several service scenarios to gain a better understanding and establish expectations.

When it comes to vendor support for your own internal service needs, know what to expect. Will you have a dedicated account manager or specific contact or will you call a generic help line? If you needed help from your current TPA, would you know how to reach someone for a same-day response?

Conclusion

As you do your due diligence when selecting a TPA, look beyond price and ask probing questions.

Contributor

Holly Murrah

MEBS Flex TPA Business Development Executive

As seen in HR Professionals Magazine.