Starting a business should not be like paying attention to irrelevant details or going back and forth with legalities. Instead, it must be a hassle-free journey so that you can focus on things that drive value. In this guide, we will simplify the legal implications of becoming a Healthcare Third Party Administrator in India. We also discuss their roles, eligibility, and fees, easing the blow for the starters.
Understanding the Roles of Third-Party Administrator (TPA)
As the insurance sector continues to boom with more and more insurers coming on board, a few focus on providing a seamless experience to the end-users i.e. policyholders. From delayed claim processing to lethargic assessment, policyholders often find themselves stuck with myriad bureaucratic hurdles. In the worst case like urgent hospitalization, things could go awry, leaving policyholders juggling with claim formalities.
That’s where a Healthcare Third Party Administrator comes into play. These professionals are IRDAI-certified and have profound expertise in diverse insurance products, their terms, claims, risks, etc. When required, they can assist policyholders with a number of endevours, including policy selection, claim settlement, risk analysis, cash-free hospitalization, dossier processing, etc.
Technically as per the IRDAI, a Healthcare Third Party Administrator can indulge in the following:
- Processing claims for cashless hospitalizations
- Ensuring smooth claim processing.
- Managing health policy administration
- Conducting pre-insurance medical exams, enabling insurers to assess risk thresholds and determine premiums.
- Assessing claims for hospitalization covered under personal accident policies and domestic travel policies.
- Resolving matters concerning overseas travel policies, including medical treatment or hospitalization beyond national boundaries.
- Assisting foreign travelers visiting India with claim settlement against policies issued by a non-Indian company.
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Understanding Eligibility to Become a Healthcare Third Party Administrator (TPA)
Apart from being a significant aid to policyholders, TPAs ease the blow for insurers by taking over various activities as discussed above. However, to be a certified TPA, it is important to meet underlying legalities as shown below:
1. Incorporation and Capital Requirements
- Companies seeking to operate as a Healthcare Third Party Administrator must have a registration under the Companies Act, 2013. Firms operating under other legislations cannot apply for IRDAI approval.
- Companies seeking IRDAI approval must have a minimum paid-up equity share capital of Rs 4 crores and (a minimum net worth of Rs 1 crore.
2. Naming and Identity
- The company name must reflect the nature of the business, which in this case is “Insurance TPA”. This is a mandatory requirement penned down by the IRDAI for anyone seeking TPA registration.
3. Foreign Investment Compliance
Foreign investments in TPAs are possible provided the company complies with the IRDAI and FEMA norms.
Steps To Become a Registered Healthcare ThirdParty Administrator
Follow the given steps when striving for IRDAI approval to become a Healthcare Third Party Administrator:
Step 1: Registration on the IRDAI BAP Portal
Navigate to the IRDAI’s official portal viz. BAP and create an account via legitimate credentials. The successful account creation will lead to the next step, which is application filing.
Step 2: Submit Application and Processing Fee
Get access to the prescribed application and fill it out with key details, concerning registration, manpower, IT resources, employees, compliances, finances, etc. Once done, recheck every detail you fill in to avoid mistakes. Any error or factual discrepancy can lead the authority to cancel the application.
Step 3: Pay the Standard Fee and Submit Additional Documentation
Upon successful filing, head to the payment page to pay the standardized fee amounting to ₹1,00,000 (plus taxes). Please take note that this amount is non-refundable. Once done, share the mandatory document to reinforce compliance with IRDAI norms.
Step 4: Pay the Registration Fee
A certain timeline shall be granted to the licensee to fulfill the pre-registration norms, proving their candidature. Upon completion of this tenure, IRDAI reevaluates the firm’s standing and accordingly accepts the registration fee of ₹2,00,000 (plus applicable taxes), marking the end of the registration process. The completion of this step will ensure the grant of TPA registration.
Fee Structure for a Healthcare Third Party Administrator
The fee structure for a Healthcare Third Party Administrator license includes:
- Processing Fee: ₹1,00,000 (non-refundable)
- Registration Fee: ₹2,00,000 (valid for three years)
- Renewal Fee: ₹1,50,000 (once every three years)
TPA registration remains valid for as long as 3 years, upon which it has to be renewed to ensure operational continuity. The cost of renewal that an applicant must pay is ₹1,50,000.
FAQs Around a Healthcare Third Party Administrator
1. What is the process for acquiring a TPA license from the IRDAI?
To start, register on the IRDAI BAP Portal, complete the application process, and pay a ₹1,00,000 processing fee. Provide all necessary documents when requested, and once approved, submit a registration fee of ₹2,00,000. If all criteria are met, you’ll be issued a Certificate of Registration by the IRDAI.
2. Who is eligible to apply for a TPA license in the insurance sector?
Only companies registered under the Companies Act with a dedicated focus on health services can apply. Additionally, the company’s name must include “Insurance TPA” to clearly indicate its purpose.
3. What is the minimum financial requirement to start a TPA business?
Your company must have a paid-up equity share capital of at least ₹4 crore. Furthermore, the net worth of the business should consistently remain above ₹1 crore during the validity of the license.
4. What is the validity period of a TPA license, and how can it be renewed?
A TPA license remains valid for three years. To renew it, you must pay a renewal fee of ₹1,50,000 before the license expires to continue operating your business without interruptions.
5. How would you define a Third-Party Administrator (TPA) in insurance?
A TPA, or Third-Party Administrator, is a specialized entity that manages health insurance services on behalf of insurers. Their responsibilities include processing claims, organizing pre-insurance medical check-ups, and facilitating cashless treatments at hospitals.
Conclusion
A Healthcare Third Party Administrator serves as a boon for insurers as well as policyholders. By addressing the aforementioned activities, TPAs ease the blow, making them an indispensable part of the health insurance sector. As with other insurance verticles, such as insurers and web aggregators, TPAs invites a load of compliances, be it a matter of registration or operation. Adhering to these norms is paramount and yet complicated.
That’s where you need a partner like Adviso, which can serve as a reliable aid in your quest to become and operate as TPA. Leverage Adviso’s expertise if you are not comfortable dealing with IRDAI norms. Adviso ensures hassle-free and in-depth assistance at every step of the way, ensuring you achieve what you have signed up for.
Also Read: A Complete Guide on IRDAI TPA Regulations
