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What Is a TPA? A Complete Guide for Self-Funded Health Plans

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Third-Party Administrators (TPAs) are one of the most important components of a well-run self-funded health insurance plan. They’re the engine behind the scenes—processing claims, managing compliance, and serving your employees.

But not all TPAs are created equal. And in a group captive model, the TPA you choose can significantly impact your cost savings, employee satisfaction, and administrative burden.

In this guide, you’ll learn the role of TPAs in self-funded healthcare, what to look for in a partner, and how Roundstone’s integrated solutions can help you get the most value from a self-funded group captive plan.

What Is a Third-Party Administrator (TPA?)

In a self-funded plan, you’re no longer paying premiums to an insurance carrier. You’re paying claims as they happen—backed by a stop-loss policy and, in Roundstone’s model, a group medical captive to share risk with like-sized employers.

The TPA is the team that makes all this work smoothly. They’re not your insurer—they’re your administrator. Their job is to handle operations while giving you full visibility into what’s happening with your healthcare dollars.

Unlike traditional insurance carriers, TPAs don’t assume financial risk or collect premiums. Instead, they operate on your behalf to administer the health plan you control. This arrangement gives you a level of transparency and influence that’s not possible under a fully insured model.

TPAs are especially beneficial for small to midsize businesses that want to offer high-quality health benefits while maintaining budget control and administrative support.

Claims management and processing. Your TPA receives, reviews, and pays claims based on your plan design, provider network, and contracted rates.

Compliance and plan document support. They help ensure your plan complies with federal mandates, manages ERISA requirements, and handles reporting.

Employee services. From ID cards to portal access, TPAs handle member-facing functions that directly affect the employee experience.

Reporting and analytics. The best TPAs give you access to real-time claims data to help manage cost and utilization.

This operational support is especially valuable for HR leaders managing lean teams and for CFOs seeking more transparency into one of their company’s largest expenses.

CFOs: Download our free CFO’s Guide to Managing Escalating Healthcare Costs to learn more about how your company can take control of health insurance costs.

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Infographic explaining the four key roles of third-party administrators

What Does A Third-Party Administrator Do In A Self-Funded Plan?

Think of a TPA as your operational partner. The difference between the right partner and the wrong one is measured in dollars saved, employees helped, and hours of administrative hassle avoided.

The wrong TPA might slow down claims, provide minimal reporting, or limit your ability to customize your plan. The right TPA becomes a trusted extension of your team.

Poor alignment creates friction. If a TPA doesn’t understand your business or your goals, you’ll spend more time managing issues and less time improving your plan.

Strong partners enable performance. A TPA that listens, adapts, and delivers high-quality service can help you streamline your benefits operations and increase savings.

Advisors—often acting as the employer’s advocate—also rely on TPAs to deliver consistency and value to their clients. A trusted TPA partner can help brokers retain business and strengthen their role as strategic consultants.

How To Evaluate And Compare TPAs For Self-Funded Insurance

A strong TPA also plays a critical role in cost containment. By providing timely access to claims data, flagging high-cost areas, and facilitating smarter care navigation, they help employers avoid unnecessary costs and maximize plan value.

Most employers aren’t sure how to compare TPAs—especially if they’re moving from a fully insured plan. But there are key factors that indicate whether a TPA will support your long-term goals or hold you back.

You need more than a low admin fee. You need transparency, agility, and a service structure built for your organization.

Look at real-time reporting tools. Can you see claims data when you need it—and understand it easily?

Ask about turnaround times. How quickly do they process claims and respond to inquiries?

Evaluate support structure. Is there a dedicated team or just a general support inbox? What’s the escalation path?

Assess captive experience. Not all TPAs understand group captives. Yours should.

Whether you’re an employer evaluating cost metrics, an HR executive looking for better service, or a benefits advisor recommending options to clients, choosing the right TPA starts with asking the right questions.

Banner offering a free ebook on mastering captive insurance for benefits advisors
Advisors: Download our free Essential Guide to Health Insurance Captives for Benefits Advisors.

How A TPA Improves Control Compared To Fully Insured Plans

Fully insured plans offer very little control. You pay a fixed premium. You have no insight into claims activity. Your network, vendors, and plan design are chosen by the carrier—not by you.

Access to claims data. You’ll see exactly how your dollars are being spent, and where savings opportunities exist.

Custom plan design. Your TPA helps you build a plan around your needs—not a carrier’s profit model.

Direct vendor relationships. You choose the providers and programs that make sense for your team.

Employers who make this shift are often surprised by how much more effective and flexible self-funding becomes when paired with the right administrative partner.

Download our free ebook, What Your Fully Insured Carrier Doesn’t Want You to Know.

Roundstone’s Preferred Bundle: A Better Way to Save

At Roundstone, we believe the right TPA should be aligned with your goals. That’s why many employers choose our Preferred Bundle—a coordinated set of vendors that work together to simplify your experience and maximize results.

Bywater as your TPA. Our in-house administrator offers superior claims management, full data transparency, and outstanding customer service.

Integrated PBM and provider network. We bundle proven solutions that reduce Rx spend and optimize provider access.

Real-time savings data. With the CSI Dashboard, you’ll see where your money is going—and where you’re saving.

The Preferred Bundle was designed to remove the friction from managing a self-funded plan. Instead of piecing together vendors with conflicting systems, you get one cohesive solution that delivers results. 

Our clients benefit from fewer administrative handoffs, faster implementation, and higher plan performance.

Employers who choose Roundstone’s Preferred Bundle save an average of $5,654 per employee per year compared to the national benchmark. These savings can be reinvested in richer benefits, retained as profit, or used to stabilize long-term costs.

Discover how our Preferred Bundle delivers real healthcare cost savings.

Banner promoting a guide on implementing self-funded insurance benefits easily
HR professionals: Download our free Guide to Self-Funding for HR Executives.

Top Signs That It’s Time To Replace Your Current TPA

If you’re already self-funded but not seeing results, the issue might be your TPA. Here are a few common red flags:

Limited access to data. If you're waiting weeks for basic reports or can’t analyze spending trends in real time, your TPA may be holding you back.

Slow claim processing or poor service. Repeated employee complaints or unresolved issues create frustration and increase HR workload.

No cost-containment guidance. Your TPA should help identify savings—not just process claims.

One-size-fits-all plan design. If your TPA isn’t helping you customize based on your workforce, it may be time for a change.

These warning signs point to lost opportunity—not just lost dollars.

Still have questions? See our answers below to the most common questions we hear from our customers.

Let’s Build a Smarter, More Flexible Health Plan Together

At Roundstone, we’ve helped hundreds of small to midsize employers take control of their healthcare spend—and selecting the right TPA is a critical part of that process. 

Whether you work with our Preferred Bundle or bring your own administrator, we’ll help you build a plan that meets your goals and delivers real savings.

Connect with a Roundstone Regional Practice Leader to learn more.

Banner highlighting cost savings with self-funding, featuring two professionals discussing

Frequently Asked Questions

What should employers consider when selecting a TPA?
Look for experience, transparency, service model, and integration with other key partners like PBMs and provider networks.

Can a TPA help manage stop-loss insurance in a self-funded plan?
Yes. Most TPAs coordinate with stop-loss carriers to manage claims over the deductible threshold and ensure timely reimbursement.

What is the role of a TPA in managing pharmacy benefits?
TPAs often work with PBMs to administer prescription plans and implement strategies to reduce medication costs.

How does a TPA improve the employee experience in a self-funded plan?
They offer member portals, ID card services, and responsive customer support to help employees navigate their benefits with ease.

What impact does a TPA have on healthcare data analytics?
They provide access to detailed claims data and dashboards, enabling employers to track trends, forecast spending, and improve plan efficiency.

How do TPAs assist with compliance in self-funded health plans?
They ensure adherence to regulations such as ERISA and the ACA, manage reporting, and maintain plan documents.

What is Bywater and how does it support Roundstone’s self-funded model?
Bywater is Roundstone’s preferred third-party administrator (TPA), offering claims management, compliance support, and data reporting tailored for group captive health plans. As an in-house partner, Bywater is fully aligned with Roundstone’s focus on transparency, savings, and employer control.

Why do employers choose Bywater as their TPA through Roundstone?
Employers choose Bywater for its integrated experience, responsive service, and proven performance in the group captive model. Bywater delivers real-time claims data via the CSI Dashboard and helps employers contain costs while improving the employee benefits experience.

Do I have to use Bywater as my TPA, or choose Roundstone’s Preferred Bundle?
No. Roundstone offers flexibility, and you are not required to use Bywater or the Preferred Bundle. Employers can choose their own TPA, pharmacy benefit manager, and other vendors. However, many choose the Preferred Bundle for its streamlined integration, real-time data access, and demonstrated cost savings.

How does Roundstone support employers in choosing the right TPA?
Roundstone helps employers identify aligned partners through its Preferred Bundle and offers ongoing support to ensure TPA performance and savings.

Contact us today to learn more about self-funding with a Roundstone group captive.

ABOUT THE AUTHOR

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Abbey Hughes

Abbey Hughes is a Content & Communications Marketer at Roundstone.

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