Employee Changed Social Security Number -- Health Plan Administrator Requires Indemnification from Sponsor before It Will Enroll the Employee

[rocknrolls2]

I represent a self-funded group health plan where the following occurred. Due to some type of issue with the Social Security number that was initially issued to an employee, the employee had to request a new number which was issued by the Social Security Administration. The third party administrator is prohibiting the employee from enrolling in the group health plan unless the plan sponsor signs an agreement indemnifying the TPA from any liability resulting from the newly issued SSN. The plan collects premiums and the TPA adjudicates and processes claims. Since neither group health plan coverage nor reimbursements of benefits are subject to federal income tax, this request seems to be grossly unreasonalbe. Has anyone encountered such a situation like this? If so, and you were successful in not having the sponsor sign the indemnification clause, what arguments did you raise that successfully got the TPA to back down from its stance?

 

Thank you!