How to determine if you need to apply for a TPA Certificate of Authority

If an entity or individual fits the definition of a TPA, per Section MCL 550.910(3) of the Third Party Administrator Act, being MCL 550.910(3), the entity or individual must be certified as a TPA in the State of Michigan if one of the following is true:

  1. The TPA is domiciled in this state.
  2. The TPA has its principal administrative office or principal headquarters located in this state.
  3. The TPA solicits a plan or sponsor of a plan or provides administrative services to a plan or sponsor of a plan, which plan or sponsor is either domiciled in this state or has its principal headquarters or principal administrative office in this state. This subdivision shall not apply to a TPA who has been licensed or certified as a TPA in that TPA's state of domicile pursuant to a statute or regulation similar to this act.
  4. The TPA provides substantial administrative services to a carrier for the carrier's business in this state.

NOTE: Generally, substantial administrative services would mean premiums of $25,000 per year collected from Michigan residents insured under plans administered by the TPA.

The following require certification as a TPA:

  • An entity that processes claims or subcontracts the processing of medical claims under a written service contract with an employer, client, insurance company, etc. Medical claims include surgical, dental, vision, pharmaceutical, disability, long-term care, cafeteria plans with a health component, non-self-funded worker's compensation medical plans, and credit disability.
  • An insurance producer/agent who processes claims for health care benefits under a service contract with a carrier, as defined above.
  • Subsidiaries of a TPA that are processing health claims need to be dually certified as TPAs. Divisions of the TPA that are processing claims do not need to be separately certified as TPAs.

The following DO NOT require certification as a TPA:

  • An admitted licensed insurance company
  • Utilization review corporations and individuals only doing utilization review

A Michigan licensed Health Maintenance Organization (HMO) cannot be a TPA.

Additionally, an Alternative Health Care Financing and Delivery System (AFDS) cannot be a TPA. A Non-Resident entity does not need to register as a foreign corporation in Michigan in order to apply for a TPA Certificate of Authority.

Adjusting

It is not necessary to employ an adjuster to be certified as a TPA if the TPA is processing only medical claims. However, if the TPA has a contract to process/adjust Property and Workers’ Compensation claims (in addition to medical claims) and there is an individual who is adjusting Property and/or Workers’ Compensation, that individual must be licensed as an insurance adjuster. Any insurance company staff adjusters do not need to be licensed.