Service history of health insurer is vital

Those opting out of TPA services won't get cashless facility; they have to follow up with company for reimbursement

While buying a health insurance policy, most compare the premia, the list of excluded diseases and the company’s track record in claim settlement. Some companies offer third-party administrator (TPA) services to settle claims, while some do it in-house. Should this be a consideration while buying a policy? Also, some companies offer a discount if one doesn’t opt for a TPA service. So, what are the advantages or disadvantages of a TPA?

Opting out of a TPA facility means the policyholder isn’t eligible for a cashless facility; the policyholder has to pay the hospital charges herself/himself, with the insurance company subsequently reimbursing the claims. Here, there are chances the company might refuse to pay the claim, citing various reasons.

The TPA negotiates contracts with hospitals and ensures a uniform experience for customers. An advantage of this is it tends to be relatively impartial, as the TPA isn’t paid on the basis of claims payout, says Yashish Dahiya, chief executive and co-founder, PolicyBazaar.com.  “If the company has a good history of claim payout and is professional, there is no need for a TPA. But if the company is very aggressive in terms of claims management, from a pure consumer-experience point of view, the TPA might be more relaxed than when the hospital handles the claims,” he says. “If you are confident you can manage the claims process on your own, you don’t need the TPA. The TPA is like a relationship manager between the customer, the hospital and the insurance company,” Dahiya adds.

For group health insurance, most companies have TPA, as they have to handle a large number of claims. But for individual policies, some companies give customers the choice to opt out of TPA. According to data from PolicyBazaar, the premium for Oriental Insurance’s Happy Health Floater (silver) plan, for a 40-year-old male with a spouse (a sum assured of Rs 5 lakh) is Rs 7,738 with TPA, and Rs 7,330 without TPA.



The TPA negotiates contracts with hospitals and ensures a uniform experience for customers. An advantage of this is it tends to be relatively impartial, as the TPA isn’t paid on the basis of claims payout, says Yashish Dahiya, chief executive and co-founder, PolicyBazaar.com.  “If the company has a good history of claim payout and is professional, there is no need for a TPA. But if the company is very aggressive in terms of claims management, from a pure consumer-experience point of view, the TPA might be more relaxed than when the hospital handles the claims,” he says. “If you are confident you can manage the claims process on your own, you don’t need the TPA. The TPA is like a relationship manager between the customer, the hospital and the insurance company,” Dahiya adds.

For group health insurance, most companies have TPA, as they have to handle a large number of claims. But for individual policies, some companies give customers the choice to opt out of TPA. According to data from PolicyBazaar, the premium for Oriental Insurance’s Happy Health Floater (silver) plan, for a 40-year-old male with a spouse (a sum assured of Rs 5 lakh) is Rs 7,738 with TPA, and Rs 7,330 without TPA.