For employee benefits plan sponsors, things have become overly complicated. New regulations and changes to old regulations seem to be occurring regularly. Keeping up with them to maintain compliance requires experience and a full-time focus. Even organizations with large human resources and compliance departments are finding it difficult to stay on top of the onslaught of regulatory developments. To alleviate this burden, ensure compliance and gain other valuable services, many plan sponsors are turning to third party administrators (TPAs).
From Compliance …
TPAs employ experienced benefits specialists whose only role is to make sure that plan sponsors’ health plans, pension, and annuity plans and/or health and welfare funds are administrated in accordance with related laws and regulations. Under such federal government agencies such as the Internal Revenue Service (IRS), Pension Benefit Guaranty Corporation (PBGC) and Department of Labor (DOL), there have been many changes to existing regulations (e.g., Final Rules on Changes to 2023 Form 5500 and 5500-SF Employee Benefit Plan Reports, Increased Penalties for Non-Compliance to the Mental Health Parity and Addiction Equity Act, as well as the introduction of new laws such as SECURE Act 2.0 to help increase retirement savings).
Individual states too have been enacting new regulations such as that adopted by the New York State Department of Financial Services to protect consumers from unfair, surprise costs stemming from incorrect information in insurer’s healthcare provider directories. A TPA can sort through all the new rules and regulations, along with providing full fiduciary and regulatory compliance to existing laws such as ERISA, COBRA, HIPAA and HITECH. The TPA’s role also extends to other areas relating to employee benefits and compensation.
To Payroll Auditing, Utilization Management and Medical Stop Loss
TPAs offer other services that in addition to regulatory compliance can be incredibly valuable to organizations. These include: payroll auditing, which when conducted by a payroll specialist can uncover significant savings for employers; utilization management, which when performed by an experienced nurse case manager, can help contain healthcare costs and promote better health outcomes; and the provision of medical stop loss to enable plan sponsors to cap expenses for their employees’ medical bills and avoid catastrophic financial losses.
TPAs can also assist in making recommendations relating to optimized benefit plan designs that accommodate an organization’s specific employee demographics and business model. Their thorough reporting and meticulous documentation further support the due diligence process relating to employee benefits.