Your administrative option choice is important to the smooth operation of your benefit plan. When making that choice, it is important to understand the affect that it will have on you and your employees.
Smooth plan administration will facilitate the efficient payment of both claims and billing processes thereby increasing overall plan satisfaction.
The Options Include;
- Insurer Direct Administration – With this option, all employee additions, changes, terminations and monthly benefits billing would be done directly through the insurance company(ies).
- If there is one insurer for all benefits, this option can work very smoothly. Many insurers offer direct online access to their systems to allow plan sponsors to enter changes electronically.
- Hard copy documentation requirements vary by insurer. Some will want the plan sponsor to house all original paperwork, while others will require that it be sent in.
- If there are multiple insurers on your plan, changes would have to be sent to all of the insurers.
- In addition, multiple insurers would result in multiple billing statements each month.
- Note - Some specialty insurers will not direct bill.
- Third Party Administration (TPA) – With this option, an independent administrative service provider is used to process all employee additions, changes, terminations and to prepare one invoice to the plan sponsor.
- This option offers ease of administration where multiple insurers are involved.
- Some TPA's offer direct access to allow employers to enter employee changes online.
- Hard copy documentation requirements vary by service provider. Some will offer you the option to house originals or leave that responsibility with them, while others will require one or the other.
- TPA's will generally prepare one bill for all benefits and remit your payments to all appropriate insurers on your behalf.
- Self Administration – With this option, the plan sponsor manages all employee additions, changes and terminations as well as prepares payment and back-up for the insurer(s) from their internal payroll or other systems.
- This option is largely exclusive to sizable employers (over 500 employees) with sophisticated payroll systems and Human Resources departments.
- Self Administration requires that data transfer capabilities are in place to send all changes to the insurer(s).