TPA licensing

[Guest Nini]

Currently, our office administers health/dependent care fsa accounts.

The Department of Insurance (DOI) does not require that we be licensed, however, for another state in which we do business, we are required to be licensed - part of the procedure requires a home state certification, which of course, requires us to be licensed in our home state.

A small portion of our health FSA business is non-ERISA plans and the DOI requires a bond equal to the greater of $100,000 or 10% of funds administered for non-ERISA plans that are not in a trust. The DOI doesn't care that the money is part of the general assets of the Employer - the bond is still required.

For those of you that administer health FSAs, if you have any ideas on how to get past this issue, please let us know.

Thanks.

[Ron Snyder]

As I recall, only about 17 states require TPAs to be licensed. Do you have a "presence" (office) in the other state? If so, you might consider using a separate entity (corp or LLC) for that state's business so that it can be licensed there. If you don't have an office, it is doubtful that you need to license there anyway. If you are still required to obtain an out-of-state TPA license, I suggest that you ask the DOI how to comply with their licensing requirements under the circumstances.

A $100,000 bond, while arguably unnecessary, is not a significant cost and is a good idea in any event.

[Guest Quicksilver]

Many states provide exemptions for TPA's administrating only single employer self funded ERISA plans. Verify that with the particular state

The Department of Insurance (DOI) does not require that we be licensed, however, for another state in which we do business, we are required to be licensed - part of the procedure requires a home state certification, which of course, requires us to be licensed in our home state.

A small portion of our health FSA business is non-ERISA plans and the DOI requires a bond equal to the greater of $100,000 or 10% of funds administered for non-ERISA plans that are not in a trust. The DOI doesn't care that the money is part of the general assets of the Employer - the bond is still required.

For those of you that administer health FSAs, if you have any ideas on how to get past this issue, please let us know.

Thanks.

[Guest TPA Licensing]

Many states do exempt from TPA licensing the administration of solely ERISA-qualified plans, but that is not the universal rule. There are 41 states that have a TPA license requirement, and some of those do require a license or registration for ERISA plan administration (and/or a bond). There are some workarounds, but it varies by state, and the state is generally determine by where there are plan members residing.

Please visit my site for more information, this is what I do for a living: http://www.crslicensing.com/TPA_Licensing.html