It's been a rough couple of years for insurance agents – bestcase, health reform will drastically change the way brokers dobusiness; worst case, brokers might have their commissions slashedand find that the new insurance exchanges can quickly and easilyperform many of the services they offer clients now.

Nonetheless, many agents remain optimistic, realizing that withchange comes opportunity – we just need to look for the silverlining. The same can be said for third party administrators.They're certainly not immune from health reform – in fact, somewonder whether they'll have a role going forward.

But, as with brokers, those who look for the opportunities arecertain to find them. Here's a quick rundown of the challenges andthreats to TPAs as well as the opportunities that might help themdo better than ever. First, most people agree flexible spending accounts are taking a hit as a result of thePatient Protection and Affordable Care Act.

As of Jan. 1, over-the-counter drugs are no longer an eligibleexpense under any tax-advantaged plan, but FSAs are hurt the mostby this new rule because of the use-it-or-lose-it provision. Theability to purchase OTC drugs at the end of the plan year served asa safety net for many plan participants; without this option, FSAparticipation is sure to decrease. Similarly, the new $2,500 annualcap on FSAs, which kicks in Jan. 1, 2013, will devalue these plansin the eyes of many employers as it reduces the company's taxadvantage. The HSA limit is already higher than the new FSA limitand continues to increase annually.

While FSA participation is likely to flatten or decrease, HSAparticipation is almost certain to explode. There are severalreasons, but the main one is cost: HSA-compatible plans willprobably be the lowest-priced option that will meet the new“bronze-level” minimum essential coverage requirements – they willhelp both individuals and employers avoid the penalties that beginin 2014.

These plans have grown exponentially for the last several years,and health reform will only accelerate this process. Where HSAs – and, in fact, any account for whichemployees use debit cards to access funds – will suffer is in theamount they earn on “interchange.” Interchange is the per-swipe feethat banks and large TPAs earn when a customer uses their debitcard, and the Dodd-Frank Bill, passed earlier this year,drastically cuts the interchange rate for debit card purchases.

Like HSAs, HRAs also could be a health reform winner. Front-endHRAs with a rollover feature can serve as great training wheels foran HSA – paternalistic employers who want to ease their employeesinto a consumer-driven plan might want to try this approach. Otheremployers will use a back-end HRA to reimburse a portion of thedeductible for their employees.

This strategy will become much more common as insurance costscontinue to rise – it will allow employers to save on premium andself-fund a portion of their deductible without jumping into thedeep end and going totally self-funded.  Speaking ofself-funding, those TPAs that provide this service to their clientsalso should see their business grow. Most experts agree a growingnumber of employers will choose to self-insure their health plansas a way to control premiums and avoid some of the requirements ofthe ACA.

TPAs with large COBRA blocks could see a significant decrease inbillable clients as most employees will opt for a guaranteed-issue,government-subsidized individual plan through the exchange. On theother hand, if the notice requirements remain the same, there's nogood reason an employer would want to begin taking on thisresponsibility, especially at a time when there are a lot of newadministrative burdens to deal with already.

And these new requirements might be the ultimate silver liningfor TPAs. Third party administrators exist because the governmentrequires a lot of paperwork brokers aren't equipped to do andemployers don't want to do. And these responsibilities aren't goingto go away with health reform; on the contrary, employers will beresponsible for completing more reports and issuing more noticesthan ever before.

This is a bad time to be an HR manager, which means it's a goodtime to be a TPA. Complexity is the friend of third partyadministrators, and any time the government gets involved, thingsdefinitely get more complex.

Sharon Alt-Bonnett is co-founder of Alt Bentley-Yates and can bereached at [email protected].