Benefits professionals know that health care benefits plans lacking in member support are a bad investment because without it, benefits utilization is lower, and expenses for things like out-of-network, specialty care, and ER visits are higher. As a result, benefits leaders typically choose to work with health care companies they are familiar with and that they know have an established member support program. 

In recent years, though, third-party administrators that specialize in self-funded plans have emerged in the market. Despite the perception, they aren't as expensive as many might think, and they typically put a strong emphasis on member advocacy. They also tend to be technology-forward and able to meet members' expectations for a digital navigation experience that is easy to use, which increases engagement that can ultimately lead to more preventive care and better health outcomes.

"Self-funded plans are hard to implement, and the solutions aren't worth the tedious transition process." 

Benefits leaders may view self-funded plan management as a full-time job in itself, requiring the juggling of various vendors across the health care ecosystem. The reality is that curating a customized benefits program for a workforce entails a lot of work.

This comes in the form of identifying health care vendors like hospital networks and point solution providers to build the plan, but the work doesn't end there. There's also the heavy lifting of implementation, which includes managing claims, understanding engagement and usage, and more.

Between recruiting and retaining employees and managing employee relations, many HR professionals simply don't have the bandwidth to take on extra work to administer complex benefits programs. In fact, many of them already outsource benefit plan selection to brokers for this very reason.

However, many brokers and HR professionals have recently discovered that TPAs can simplify the process of selecting and transitioning to a self-funded plan, freeing them up to focus on other less tedious deliverables. TPAs can offer valuable assistance to employers transitioning to self-funded models by providing professional expertise in areas such as plan design, risk management, and claims administration. These services streamline the implementation process and help ensure each plan is tailored to meet the unique needs of an organization and its workforce. For context, with the help of a TPA, most companies transitioning to a self-funded plan can go from exploration to implementation in as little as a few months time. 

The right TPA will offer a seamless, streamlined experience, so companies don't have to juggle various moving parts. Instead, the TPA should serve as a one-stop shop for an employer's particular benefit needs. 

"Self-funded, third-party administered plans just don't offer enough savings." 

Any benefits professional who has ever looked into adopting a self-funded plan knows that on paper, these plans don't always appear to be more affordable. The reality is that TPAs have a reputation for being "white glove" and a "nice to have" service that is first on the chopping block whenever it's time to cut budgets.

But the reality is that the holistic costs associated with fully-insured and self-funded plans include more than just a per-member price point. Fully-insured plans often come with higher taxes, the risk of rate hikes, and tough carrier negotiations – all of which make them less predictable for employers than self-funded plans. Fully-insured plans also set insurance premium rates based on an employer's population pool, so employees with higher health risks can have an outsized impact on how carriers set premium rates.

Third-party administered plans, on the other hand, may have equivalent or even slightly higher costs on paper than fully-insured plans, but research has shown that they can drastically reduce costs over time by controlling cost increases. There is also evidence to suggest that technology-forward TPAs offer better member support and engagement than fully-insured plans, which can result in more preventive care and fewer out-of-network and emergency visits. 

All in all, the above misconceptions about self-funded health care and/or TPA plans can hinder companies from providing significantly better benefits packages to their workforce. Despite the confusion and hesitancy surrounding the switch to self-funded, working with a reputable and professional TPA actually grants employers access to the expertise they need to design and implement a plan that meets – and maybe even exceeds – employee expectations. 

It's imperative for benefits advisors to familiarize themselves with new, tech-enabled solutions for employer-sponsored benefits programs so that they can help enterprises make more informed choices. By breaking down these misconceptions, both internally and externally, brokers can be part of building a more efficient, flexible, and cost-effective health care system for all.

Sasha Yamaguchi is VP of Growth & Broker Relations at Collective Health.