7 Things To Consider When Choosing a TPA for Your Pre-Tax Benefits

When you decide to offer pre-tax benefit plans like an HSA or FSA to your employees to help them save on their healthcare expenses, it’s important to team with the right third party administrator (TPA) who can make it as easy as possible to provide these benefits. There are a lot of providers who can help, so you’ll want to assess each one carefully so you can choose the right fit for your organization.

Complete Payroll Solutions has been administering pre-tax health plans for companies for over 18 years. While we work with over 8,000 clients, we know that we’re not necessarily the best fit for every business. But we understand the factors companies should consider when selecting the best vendor for their unique needs.

Here, we’ll help you in your review of TPAs by addressing the top considerations you should take into account when choosing an administrator for your pre-tax benefits, including:

  • Experience
  • Support
  • Compliance Expertise
  • Services
  • Cost
  • Payroll Integration
  • Other Offerings

After reading this article, you’ll be in a better position to evaluate potential TPAs and find the ideal partner for your pre-tax benefit offerings.

 7 Things to Consider When Choosing a Pre-Tax Benefit Plan TPA

There are a lot of TPAs on the market to choose from for your pre-tax benefit plan administration, which can make it hard to decide on the best one for your company. Here are 7 tips to help you select a right-fit TPA.

1. Experience

You’ll want to look for a TPA that serves clients in your industry or businesses of your size. Since some TPAs are generalists, it’s also important to find a TPA with specialized knowledge of pre-tax benefits to help you comply with legislative requirements and changes. Before you select a TPA, ask who will be assigned to your team and find out their background and level of expertise.

2. Support

Each TPA will differ slightly in their approach to client support. You’ll want to find out up front what you can expect from your TPA in terms of service. Ask if you’ll be assigned one dedicated professional who is knowledgeable about your program and is responsible for day-to-day management – and how accessible they’ll be. You’ll also want to find out their process for issue resolution or how you can access support if your specialist isn’t available. Lastly, ask if they provide participant support and, if so, what type and who is providing it.

3. Compliance Expertise

When it comes to benefit plan compliance, you’ll want to make sure your TPA has qualified experts who will administer your benefits accurately and compliantly. While the chance of an audit is probably low, the risk is high if noncompliance unexpectedly results in years of past salary reductions suddenly becoming subject to taxation. So you’ll want a TPA who can guide you through the laws and regulations and create the required documents and procedures so you’re compliant with the requirements of Section 125. That means everything from developing summary plan descriptions to performing annual non-discrimination testing.

4. Services

Using a TPA to help you offer pre-tax health benefits should make it as easy as possible and relieve you by outsourcing management of the day-to-day administration. When evaluating TPAs, find out what you can expect from them in terms of both daily tasks as well as annual ones. For example, in addition to activities such as providing year-end tax reporting or Form 5500 preparation, you may want to ask if they:

  • Handle enrollment and set up employee accounts
  • Process claims
  • Certify submitted expenses
  • Manage new hires and terminations
  • Offer monthly reporting of plan activity

5. Cost 

While pre-tax benefits are intended to be a vehicle to help employees save on out-of-pocket healthcare costs, you’ll want to make sure they’re not costing your business too much to offer. As you search for a TPA, you’ll want to ask what they charge to administer pre-tax benefits. Generally speaking, TPA costs are charged on a per employee per month (PEPM) basis. Some administrators will charge the PEPM fee based on tiers of the number of employees, for example, 1-5 employees, 6-10, employees, and so on. Others will charge a flat rate per worker regardless of the total number of employees. Be sure you understand exactly how you’ll be charged. Either way, the good news is for every $1 that an employee elects, the employer saves on their required 7.65% Social Security taxes.

6. Payroll Integration

One way a TPA can help streamline your pre-tax benefits program is by providing seamless payroll integration to process contributions as well as claims processing for reimbursing manual claims. Whether you’re using your payroll company as your administrator or another TPA, you should find out if pre-tax deductions will be automatically withheld from an employee’s paycheck for simplified administration.

7. Other Offerings

Since a TPA should make your benefits administration easier, find out what other products or services they offer that can help you enhance efficiencies for designing, enrolling in, and managing your pre-tax plans. For example, do they have an HRIS for benefits enrollment? Do they also work as a broker to help you find the best coverage options? You have a lot to worry about as an employer so you’ll want to find a TPA that will take as much off your plate as possible.

How to Choose the Best TPA for Your Pre-Tax Benefits

As you can see, there’s a lot to consider when choosing a TPA. As you review your options, it’s a good idea to stack up in these 7 areas. As you go through this exercise, Complete Payroll Solutions may be a good fit for you.

We are an ideal TPA for businesses that:

  • Have up to 100 employees
  • Want assistance in plan design
  • Prefer personalized service from one dedicated representative versus contacting a call center
  • Currently use us for payroll and want to integrate pre-tax salary deductions
  • Are interested in additional support like open enrollment meetings for your employees

To find out what you can expect from our TPA services, read our next article about our pre-tax offerings.

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