What Does Third Party Administrator (TPA) Mean?
A third party administrator (TPA) is typically an organization that is hired by an employer to manage employee group benefit plans. The term may also refer to an organization that is hired to facilitate a relationship between two other organizations.
A TPA is a separate entity from the organization or unit that actually provides insurance and benefits to employees.
Safeopedia Explains Third Party Administrator (TPA)
Third party administrators are often used to ensure that the administration of benefits is done with minimal conflicts of interest and also because a TPA has the ability to provide a specialized level of service (benefits administration) that the contracting company lacks.
Self-insured businesses often use TPAs to administer their in-house insurance programs. TPAs also administer benefits programs that rely on insurance plans from external companies. Typical TPA services include the completion of claims forms for employees, the payment of benefits to workers and medical providers on behalf of the provider, the evaluation of employee claims, and reports of claims to applicable government agencies.
Many TPAs also provide health and safety training for employees and providers. In the United States, a TPA’s health and safety functions may include facilitating the compliance of their clients with OSHA injury and illness recordkeeping requirements.
TPAs may also be used to mediate a relationship between organizations for non-benefits purposes. For instance, OSHA has previously engaged the Underground Contractors Association to act as a TPA between itself and companies involved in underground contracting work. The purpose of this type of agreement is to facilitate OSHA’s injury-reduction goals through the use of a third party that has a relationship to and an interest in the success of a particular industry, affording it with the ability to more effectively engage in safety promotion and records-management activities within that industry.