Chapter 5 — YOU GOTTA LAUGH: Life in the Trenches of the Health Insurance Business

This month's health insurance nightmare: You submit your health insurance payments through a third party administrator but the administrator does not remit payments to the carrier, therefore all coverages for all employees are canceled.

The situation: The Alagassi Companies uses a broker for their insurance needs. The broker chooses where to submit the business — sometimes it is directly with the carrier, but many times there is a third party intermediary such as a wholesaler or a third party administrator.

Here's how that works: There is no difference in cost for the company purchasing the insurance. A broker chooses either a wholesaler or a Third Party Administrator (TPA) based on additional services that can be received from that organization. A wholesaler typically does not remit payment to the insurance company as the insurance carrier bills the customer directly. The organization processes renewals, runs quotes and handles problems on behalf of the client.

A TPA typically submits payment to the insurance carrier on behalf of the client thus creating another level between the client and the carrier. In fact, it would not be unusual for the TPA to do the billing, rather than the carrier.

The problem: In this case, the Alagassi Companies was using a TPA through their old broker thus submitting payment for their health insurance premiums to the TPA. The TPA unfortunately was not remitting payment to the carrier; thus the employees all received a notice that their coverage was canceled. The client was embarrassed — and furious — all at the same time.

The solution: If this is the process your company uses, make sure you ask your broker if they use a wholesaler or a TPA. It is always better to submit directly to the carrier to avoid these potential issues. With online technology, direct debit payment availability and other useful tools, there is no need to have an administrator collect the money. You want broker representation without multiple layers.

If we were the Health Insurance Ambassadors: We would not allow third party billing and collection of premiums. All insurance carriers should be paid directly from the customer thus alleviating cause for delay and loss of money.

The painful truth: If you are submitting your payments through a third party vendor, do not assume that your premium payment has reached the carrier — even though you have a canceled check. Yes, it's sad but true.

Share your stories: We encourage you to tell us about your insurance nightmares. Send an email to our newsletter editor, "hope@inkandescentpr.com.":mailto:hope@inkandescentpr.com