Keeping track of a health insurance plan is one of the many responsibilities employers deal with in managing a business. Health insurance administration consists of several processes and tasks that can quickly drain the resources within a business' human resources department. Third party administrator roles take on much of the responsibility involved with managing employee health benefits.
Function
Third party administrators exist as individual, one-person specialists in benefits administration or as entire agencies or firms. Businesses that provide health insurance benefits to their employees can opt to have an in-house specialist or hire an agency to handle these tasks, according to Financial Web, an investments reference site. Third party administrators focus specifically on every thing there is to know about health insurance plans, including eligibility requirements, enrollments and claims processing. As laws and regulations surrounding health insurance change on a yearly basis, administrators stay abreast of the changes that impact an employer's health plan.
Benefits Adminstration
Third party administrators can mange different types of benefit plans, such as 401k and life insurance, in addition to health insurance plans, according to Business.com, a business management resource site. In some cases, a company will assign all benefit-related activities to a third party administrator as a way to conserve the company's available worker resources. Companies that self insure employee health benefits may use third party administrators to manage anything having to do with employee benefit plans. When it comes time to process or pay on a claim, administrators can access a specific fund set aside by the company for health claim payments. It's the administrators job to review claims and process them according to the terms contained in the employer's health plan contract.
Outsourcing
The complexities involved with managing employee benefit plans causes many insurance companies to outsource these tasks to third party administrators. Insurance companies may employ third party administrators to process claims for the employer plans they sponsor, according to Financial Web. Within this role, administrators take on all claims processing tasks, some of which include collecting premiums, handling new enrollments and handling all correspondence sent to customers in terms of plan changes and account statuses. With so many types of industries providing employee health benefits, third party administrators may specialize in different areas in terms of industry type or the types of benefits plans they handle.
Professional Employer Organizations
Professional Employer Organizations -- also known as PEOs -- consist of large corporations that specialize in handling employee benefit plans for insurance companies and employers, according to Business.com. PEO's may also manage other human resource processes, such as payroll and retirement plans. PEO's are particularly adept at negotiating the terms of a health insurance plan on behalf of its clients. These negotiations can help companies get better rates and coverages for their employees and lower the employer's cost as well. Professional Employer Organizations may also offer consulting or training services to help companies better manage their existing health plans.
