If you’ve been researching employee benefits, you’ve probably come across the term third-party administrator, or TPA. But what exactly is a TPA, and what role does it play in your group’s health insurance?

The short answer: a TPA helps make employee benefits easier to manage. Rather than replacing your health insurance company, a third-party administrator works behind the scenes to simplify administration, coordinate services, and provide support for employers, brokers, and employees. In fact, according to the Society of Professional Benefit Administrators, about 60% of American workers are enrolled in health plans that are administered by a TPA.

How Does a TPA Work?

A third-party administrator is an independent organization that handles many of the day-to-day administrative responsibilities associated with employee benefits. Depending on the program, a TPA may help with:

• Enrollment and eligibility administration
• Premium billing and payment processing
• Customer service for employers and employees
• Claims support and issue resolution
• Coordination between insurance carriers, brokers, and employer groups
• Provider network and benefits administration

Think of a TPA as the organization that helps keep everything running smoothly so employers don’t have to manage multiple insurance companies and administrative processes on their own.

Is a TPA the Same as a Health Insurance Company?

No, this is one of the most common misconceptions. A health insurance company provides the medical coverage and pays covered claims.

A third-party administrator helps administer the program and serves as a central point of contact for employers, brokers, and members. The two work together, but they have different responsibilities.

How CaliforniaChoice Works

CaliforniaChoice is a private health insurance exchange offered by CHOICE Administrators, a third-party administrator. That means CaliforniaChoice doesn’t insure members directly. Instead, employees receive their health coverage through one of seven participating health insurance carriers:

• Anthem Blue Cross
• Health Net
• Kaiser Permanente
• Sharp Health Plan
• Sutter Health Plan
• UnitedHealthcare
• Western Health Advantage

The plans available depend on where your business is located and where your employees live. For example, an employer with employees across California may have access to all seven participating health plans. A business located in Los Angeles County may have four available carriers, while employers in San Diego or Sacramento may have additional regional health plan options. This approach gives employers a single, simplified benefits program while still allowing employees to choose the health plan that best fits their needs.

Who Do Employees Contact?

Because employees are enrolled in a health plan from one of CaliforniaChoice’s participating carriers, their member ID card clearly identifies:

• Their health insurance company
• Member ID and group number
• Claims mailing address
• Customer service phone numbers
• Pharmacy and prescription drug contacts

If an employee needs assistance before receiving their ID card, CaliforniaChoice Customer Service can help connect them with the information they need.

Why Many Employers Choose a TPA

Managing employee benefits can quickly become time-consuming, especially when multiple insurance carriers are involved. A third-party administrator simplifies that experience by bringing administration, billing, customer support, and enrollment together in one place.

For employers, that means less administrative work. For employees, it means a simpler enrollment experience and easier access to support. And for brokers, it means one trusted partner helping coordinate the entire benefits program.

Learn More About Third-Party Administrators

If you’re exploring employee benefits for your business, your health insurance broker can explain how a third-party administrator fits into your overall benefits strategy and whether a private health insurance exchange like CaliforniaChoice is a good fit for your company.

Don’t currently work with a broker? We make it easy to find one online at mycalchoice.com.