Glossary
Third-party administrator (TPA)
An outside firm hired to run claims and administration for a self-funded plan, captive or self-insured program without taking on the insurance risk.
Also called: TPA, claims administrator, third party administrator
A third-party administrator handles the paperwork and decisions of a risk program that the sponsor funds itself. For a self-funded health plan it enrolls members, adjudicates and pays claims, supplies or rents a provider network and reports results. For a self-insured workers' comp program, a large deductible or a captive, it investigates and settles claims, sets reserves and manages medical care. Fees vary by arrangement: a per-member-per-month charge is common for health plans, and per-claim or percentage fees for casualty programs.
The TPA does not bear the underwriting risk. The employer or captive pays the claims, and stop-loss insurance limits the large ones. Carriers sometimes offer TPA services themselves, and independent TPAs compete on data, service and cost.
Hiring a TPA delegates tasks, not responsibility. For an ERISA health plan the employer typically remains the plan fiduciary, so vetting matters: audit rights, access to claims data, accuracy and turnaround standards, how subrogation and reserves are handled, and what happens to run-off claims if the contract ends. In captives and large deductible programs, claim-handling charges are part of loss adjustment expense. The guide on Self-insurance and third-party administrators (TPAs) explained explains how employers choose and manage one.
Last reviewed October 10, 2026