So, outsourcing your retiree billing administration has probably crossed your mind once or twice. Understandable—it’s one of those redundant monthly tasks that can be surprisingly labor intensive and draining to the productivity of your administrative personnel. Furthermore, depending on the size of your retiree population, the monthly task of collecting and processing retiree health insurance payments can have high associated labor and opportunity costs.

Most public sector employers that look to outsource their retiree billing are experiencing the following:

1. A long-time clerical employee is about to retire, and they’d like to distribute his or her responsibilities amongst the current staff and avoid filling the position
2. They are working to improve their relationships with retirees
3. They are working to free up time for their current staff to handle more pressing needs, specifically with regard to healthcare reform and other high-risk compliance concerns

Depending on organizational bylaws, public sector employers considering outsourcing their retiree billing administration may need to initiate a Request for Proposal (RFP). Here are three things that any Retiree Billing RFP should include.

Retiree Billing Objectives

There are two main objectives to include in the scope of work for retiree billing.

1. To facilitate the accurate payment and reporting of retiree coverage premiums. This is the basic nature of the service—collecting retiree healthcare premium contributions and remitting the payments back to the employer.
2. To ensure accurate retiree billing, premium collection from various sources, and accurate premium payment and reporting plus reconciliation of premium collected with billing for various benefit providers. Here, the employer is responsible for communicating any member changes to the TPA, and the TPA will reconcile monthly bills to ensure the employers are not overpaying for monthly premiums.

Furthermore, it’s also prudent to ask a prospective retiree billing TPA what their policy is for handling delinquent payments. This will give you an idea of where the TPA’s responsibilities end and the employer’s begin with regard to terminating coverage for non-payment.

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Vendor Evaluation Criteria

Consider the following criteria for evaluating different billing TPAs:

1. Service and Administration. Understanding of the requirement and the ability to provide the District with the required services.
2. Prior Experience. Firm experience in providing the services to public sector organizations similar to the District.
3. Professional Personnel. Qualifications of staff – competence and availability of personnel assigned to the job.
4. References.
5. The proposed fee structure over the duration of the contract as it relates to retiree billing administration.
6. Other Benefits Provided.

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General Operating Questions

When assessing a retiree billing TPA’s processes, it’s important to clarify how they perform their duties while keeping the employer informed. Some questions to consider in a Retiree Billing RFP would include:

1. How do you differentiate your service from that of your competitors?
2. How do you generate and communicate aging reports to your clients?
3. How do you handle delinquent payments?
4. What types of communications are you providing to retirees?

{{cta(‘f3d22a85-eb63-4edc-b334-434eaece0adb’,’justifyright’)}} Looking to get started in crafting your organization’s Retiree Billing RFP? Jump-start the process with our free editable Retiree Billing RFP template.