Third-Party Administrator (TPA) Fee Expense
Paying a TPA for managing the medical network, pre-authorizations, and claims processing.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| TPA Management Fee Expense | Expense (+) | 15,000.00 | - |
| Accounts Payable (TPA) | Liability (+) | - | 15,000.00 |
💡 Accountant's Note
TPAs manage medical claims operationally for insurers who do not have their own networks. The fee is typically a percentage of premium or a per-member-per-month (PMPM) rate. It is a direct expense of the medical line.
Practitioner & Systems Framework
💻 ERP Architecture
TPA fees are calculated per the TPA service agreement — either as a percentage of gross premium written, a PMPM rate multiplied by average member months, or a fee per claim processed. The TPA submits a monthly invoice with the fee calculation detail. The invoice is posted to AP and the TPA management fee expense account. For IFRS 17, TPA fees are a direct administrative cost of the medical contracts and are included in the fulfillment cash flows for PAA/GMM measurement.
⚠️ Audit Flags
Auditors confirm that the TPA fee is calculated in accordance with the signed service agreement and test the calculation for a sample of months. Review the TPA performance against service level agreements (SLAs) — if the TPA is not meeting SLAs (e.g., pre-authorisation response time, claims processing time), penalty provisions in the agreement may apply and should be reflected in the fee. Assess whether the TPA relationship represents value for money by comparing the PMPM rate to market benchmarks.
📄 Required Documentation
TPA service agreement specifying fee structure, monthly TPA invoice with member count and fee calculation, SLA performance report, payment confirmation, and market benchmark comparison if available.
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Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
Specialized in SAP GUI automation and Middle Eastern tax compliance. Building digital tools for the next generation of finance leaders.