A third-party administrator (TPA) is an organization that manages several day-to-day aspects of your employee retirement plan. Their role involves:
- Designing retirement plan documents
- Preparing benefit statements of both employer and employee
- Ensuring plan compliance with the IRS non-discrimination requirements
- Preparing annual returns and reports as required by IRS, DOL, or other government e bagencies
For instance, you can enroll a TPA to create a 401(k) plan for your employees. This expert will design and administer the best 401k plan for your business that will not only make it more competitive but will also show your employees that you care about their financial future, according to E.H. Thomson & Co.
How TPAs Can Help Your Business
If you are thinking about whether you need the services of a TPA, here are four good reasons why should consider it:
1. They Can Be Your Key to Savings
TPAs offer businesses the most competitive deals while creating a plan for their employees. They can better negotiate a renewal with an insurance carrier since they have thousands of employees under contract, against a broker/advisor that has a far less significant number with a specific carrier. TPAs can also provide you with cost-reducing options and identify any reimbursement opportunities that your business qualifies for, from wellness programs to all kinds of discounts.
2. They Can Protect You from Fraud
Workers’ compensation fraud is a $30 billion problem annually in the United States and it costs the state of California alone between $1 billion to $3 billion per year, according to the California Department of Insurance. An experienced TPA can identify the potentially fraudulent claims and save your business time and money as they often see several falsified injury reports.
3. They Can Ensure Compliance
They even perform the compliance testing for the chosen plan which is mandatory and complicated. If an issue occurs during testing, they also make recommendations or provide solutions so that you remain in compliance with the latest law or regulations.
4. They Can Minimize Costs of Injuries
Injuries at work in the United States cost around 53.9 billion dollars in wage and productivity in 2019, according to the figures published by Statista. Your TPA can educate your employees about the best safety practices and help you adopt safety programs that can reduce the number of claims made each year.
When you partner with a TPA, you can create a safer workplace for your employees and ensure lower premiums for your company. If you have an existing TPA arrangement, make sure they are meeting your overall objectives and performance.