Choosing the Right TPA Model for Your Healthcare Plan

April 21, 2026

By Dominic Micali and Joseph DiBella, REBC

Employers and plan sponsors are increasingly opting for self-funded health plans over fully insured health plans, in part, to gain access to detailed claims data that allows them to identify cost drivers and tailor benefits to better meet employee needs. This approach enables companies to directly manage their healthcare expenses, potentially reducing costs when claims are lower than expected while leveraging stop-loss insurance for financial protection against large, unexpected claims. For plan administration, such as member service and claims processing, self-funded plans rely on Third Party Administrators (TPAs). Depending on their goals, employers can choose from several TPA models.

The Three TPA Models

There are three types of TPAs employers can work with to manage their self-funded plan: a health-carrier-administered TPA, a true independent TPA and a hybrid, health-plan-owed TPA. While all models will support self-insured employers, the administrative experience, operational flexibility and overall employer and member impact can differ significantly. The appropriate TPA model ultimately depends on the employer’s priorities – whether they value integration and scale or flexibility, transparency and customization.

1. Health-Carrier-Administered TPA

   National health carriers are fully integrated insurance organizations that can provide administrative services for their fully insured plans and employers’ self-funded plans. When administering self-funded plans, these carriers commonly unbundle their fully insured infrastructure to deliver a familiar, standardized experience. This includes proprietary provider networks, claims systems, medical management and integrated reporting.

   While this TPA model does offer “plug-and-play’ convenience for employers, it also lacks transparency, flexibility and opportunities for customization. For example:

   • The carrier controls claims data and limits what employers see, reducing their ability to address care gaps or mitigate claims through population health strategies.
   • This model often limits vendor carve-outs, customization, network design and specialty program rules — and carriers typically mandate the use of their chosen or affiliated pharmacy benefit managers (PBMs).

   What a health-carrier-administered TPA does bring to the table is scale, stability, established processes and a comprehensive administrative platform. For plan members, there is typically no visible distinction between fully insured and self-funded arrangements under a carrier model. Familiar insurance company branding on plan ID cards makes the transition to self-funded seamless for employees.

2. True Independent TPA

   In contrast to a health-carrier-administered TPA, a true independent TPA is not associated with a national health carrier. They are focused exclusively on self-funded plan administration. These TPAs generally operate their own claims processing platforms and lease provider networks from carriers rather than owning them.

   While true independent TPAs may not have quite the breadth of infrastructure or brand recognition of a health-carrier-administered TPA, they are the most nimble — offering employers greater transparency and control, as well as the flexibility needed to support tailored plan designs. For example:

   • Data transparency and customizable reporting to provide employers with the comprehensive claims data needed to create health and wellness strategies tailored to their employee population.
   • Flexibility to support seamless integration of third-party vendors and giving employers freedom of choice with respect to pharmacy benefits administration, care management and other carve-out strategies.
   • Ability to adopt disruptive reimbursement models, such as reference-based pricing that reimburses hospitals at a transparent percentage of Medicare, allowing employers to achieve predictable, balanced reimbursements and long-term cost savings.

3. Hybrid, Health-Plan-Owned TPA

   Recently, hybrid, health-plan-owed TPAs have formed. These TPAs are owned – but not operated – by national carriers, offering some of the flexibility of true independent TPAs with carrier infrastructure. These administrators tend to be more responsive than their parent carriers, but share some limitations, such as:

   • In some instances, hybrid, health-plan-owned TPAs operate within strategic parameters established by the parent organization, so similar to a health-carrier-administered TPA, there are typically limitations around choosing vendors such as PBMs.
   • When it comes to data ownership and claims reporting, hybrid, health-plan-owned TPAs provide more access than the carrier would but are not as transparent as a true independent TPA.

TPA Models At-A-Glance

While there’s no one-size-fits-all approach to selecting a TPA model, employers will want to choose the one that best meets the needs of their business and employees. The table below compares the three TPA models across several key measures.

Comparison of TPA Models Across Key Measures

The Conner Strong & Buckelew Advantage

Working with the right TPA is key to ensuring the success of a self-funded plan. A strong broker partner can help employers determine which TPA model is the best fit based on organization size, priorities and employee population. At Conner Strong & Buckelew our team of employee benefits experts work with employers to conduct due diligence in evaluating TPA partners —  from breaking down TPA fees and embedded costs to identifying strengths and alignment with goals. Working together with our population health team, our employee benefits advisors help employers design a benefits plan that is tailored to their unique needs.

Ready to elevate your employee benefits strategy? Contact us today to partner with experienced professionals committed to helping you control costs and care for your people.