Third Party Administrator (TPA) license requirements vary between states, so our insurance business and regulatory group provides TPAs nationwide assistance on a range of issues and concerns.
Public Act 11-58 in Connecticut mandates that TPAs who are not licensed by the Department must register. Entities exempt from licensure as TPAs must register as independent adjusters instead.
Licensing Requirements
Harbor Compliance offers licensing management software and managed services to assist TPA firms with meeting state licensing requirements, which may often involve extensive paperwork and documentation to meet them. Harbor Compliance’s tools simplify this process while simultaneously guaranteeing all applicable laws are being adhered to.
TPAs are responsible for processing claims on behalf of insurance companies. To obtain their license, TPAs must satisfy various requirements such as being registered with the ROC as either a corporation or limited liability partnership and submitting their Memorandum and Articles of Association as well as certificates from them confirming registration status. Furthermore, they must display both their license number as well as which insurers they represent.
TPAs must possess a minimum paid-up equity share capital of four crores to be licensed, and must limit themselves exclusively to health insurance administration activities; no other activities should be pursued by the company. Furthermore, in order to comply with Indian law requirements regarding TPAs they must include the words “Insurance TPA” in their name to identify themselves as such.
TPAs must also obtain a license in order to adjust workers’ compensation claims, which requires providing proof of financial stability as well as providing a surety bond equaling 10 percent of average daily client account balance over the previous year. In addition, TPAs must possess at least three years’ experience adjusting workers’ comp claims.
Public Act 11-58, which went into effect October 1st 2011, gives the Connecticut Insurance Department oversight over third party administrators (TPAs). As part of this legislation, TPAs must either obtain a license from or register with them in order to collect premiums, underwrite, adjust, and settle life, annuity and health claims on behalf of insurers.
TPAs must also renew their licenses on an annual or biennial basis to remain compliant with all state regulations, remain in good standing and stay informed on regulatory and legislative activities that could impact them. Furthermore, they should be prepared to respond to inquiries or formal regulatory actions brought forth by state insurance departments or attorney general offices.
Renewals
TPA firms provide operational services under contract with clients such as insurance companies or healthcare providers, typically serving insurers’ core businesses such as claims processing and customer service while handling more complex processes like retirement planning or workers’ comp claims.
Many states require TPAs to obtain a license before conducting business within their borders. TPAs usually need to file an application and post surety bonds in order to operate legally, while continuing education courses may also be mandatory depending on where they operate. Harbor Compliance offers licensing management software and managed services to help simplify this process and help your company remain compliant.
Before selecting a TPA firm to handle claims or assist in underwriting processes, it’s crucial that you familiarise yourself with state requirements in your state. Most states have renewal and maintenance requirements that must be fulfilled in order to keep their license active; choosing an authorized firm could help avoid expensive penalties while assuring your company remains in good standing.
Most states mandate TPA license renewal every year or biennially. Renewal fees usually cost far less than initial licensing costs; therefore it’s essential that TPAs renew their license on time so as to stay operating legally and maintain legal compliance. Harbor Compliance can help your TPA meet renewal and maintenance requirements quickly and cost effectively, saving both time and money!
TPA firms offer valuable guidance and legal support when faced with complex regulatory or legal matters. At Polsinelli’s Insurance Business and Regulatory group, our attorneys have extensive experience representing TPAs on a national basis regarding an array of business and compliance matters affecting TPAs – many of them were in-house TPA counsel themselves and are part of the Federation of Regulatory Counsel.
TPAs must keep their National Producer Number (NPN) updated, as part of maintaining state licensing. An NPN is assigned during initial licensing, and is used for reporting, record keeping and other purposes. Should there be changes to your name, address or other data in your NPN records it is vitally important that they are immediately reported back to state agencies as soon as they occur.
Maintenance
As a TPA business, you will need to meet state licensing requirements and stay abreast of changes to policy or regulatory requirements. To meet these standards, your business must compile all the required documents such as financial statements, proof of commercial activity license and business plans, as well as designating a registered agent who can receive notices of lawsuits or legal notices on your behalf. Harbor Compliance’s licensing management software and managed services offer you a seamless way of managing this process while freeing you up for daily operations of your TPA business.
TPA firms must maintain books and records of all transactions they perform for customers, making these available for inspection at any time upon customer request, with records retained for at least five years post transaction. A fiduciary account should also be set up so any amounts paid by or on behalf of an insurer, HRA, FSA, or HSA shall be returned promptly if not needed for performance of duties.
TPAs must submit an annual report to the Division of Financial Regulation by March 1 each year, covering either calendar or fiscal years. This report must include information regarding all persons who own ownership interests in or control of their TPA, any changes in ownership interests or control, biographical affidavits of all officers, directors and key managerial personnel reviewed by an independent third-party NAIC vendor as well as any changes that occur during that year.
Failure to file its annual report could incur a $500 fine. TPAs must notify the commissioner within 30 days of any changes in their owners or officers and submit an updated biographical affidavit within this time. They also need to complete and file their financial reports, with any amounts paid as performance fees returned promptly if no longer needed for performance of those duties.
Compliance
The licensing process to become a travel management agency (TPA) can be complex. It involves gathering financial documents, proof of business plans, registering an agent who will receive notice of lawsuits or government actions, etc. Harbor Compliance offers TPAs with licensing management software and managed services to make the process simpler – whether filing for new license or renewing existing ones, we’re here to help you navigate any complications along the way.
TPAs must also maintain a minimum working capital requirement of Rs 1 crore to meet regulatory standards and cover operational expenses over the coming year. This amount must be calculated based on their company’s total assets and liabilities and be sufficient to cover these.
TPAs (Third Party Administrators) offer back office administrative services for insurance companies, such as underwriting and claims processing. Some TPAs specialize in specific niches like dental or workers’ comp; others perform administrative tasks for various products and carriers.
State laws vary according to the type of TPA being operated, with some requiring them to obtain licenses in all the states where they operate while in other instances only needing one license may be needed for operations in one location.
For instance, in New York if a TPA handles workers’ compensation claims on behalf of its clients it must obtain the necessary licenses in order to do so as it performs adjusting work and according to New York state law requires anyone who exercises discretion in adjusting claims be licensed as an independent adjuster.
TPAs can also help life insurance carriers outsource their back office operations. For instance, an insurer looking to enter new markets such as annuities might hire a TPA to get its business up and running quickly if it lacks either domain expertise or legacy technology capable of initiating the project themselves.
While most states comply with Model Law 90-1, which exempts TPAs from licensing requirements, five require some form of exemption certification or registration; these states include Alaska, Georgia, New Hampshire, Texas and Vermont.