liability of third party administrator

[Guest prucker]

doesn't a third party administrator have liability when they have not received premiums from an employer for several months, yet they are still verifying insurance coverage to providers as covered?

[GBurns]

Why would the employer send premiums to the TPA and not the insurance company?

The termination of coverage for non payment pf premium is a decision of the insurer not the employer and definitely not of any TPA.

What do you think would happen if the TPA shot off their mouth and told providers that there was no coverage and it turned out that the employer had sent the premiums directly to the insurer but never thought it any of the TPAs business so never told the TPA?

[jeanine]

prucker, you need to add some more details. I know you posted previously about a self-funded company declaring bankruptcy. Just because the company continued to deduct contributions from employee checks (is this what you are referring to as premiums?) does not mean that the company forwarded them to the TPA. A self-funded company pays a TPA administrative fees, plus sends enough money to cover the claims submitted for a particular time frame. The TPA is probably still owed its administrative fees, along with the fact that there is no money in the company's account to fund claims.

[Guest prucker]

Right, but the TPA was the source called by providers to verify coverage. At what point when they knew they weren't receiving their fees or payments for claims should they have discontinued verifying coverage. My question is what is their liability since they were knowledgeable of the situation long before the employees or providers could know?

[Mary C]

There's a very good chance the TPA did not know any earlier than you. Former employer had a self funded plan and we were only billed quarterly by the claims administrator (TPA). Therefore, we could theoretically go six months without paying an admin fee. Also, the account that checks were written on to pay claims was controlled by the employer, not the TPA. We deposited the money and reconciled the account, the TPA just adjudicated the claims and issued checks.