Health insurance in the United States is a confusing and convoluted topic. With so many options to choose from and costs to take into consideration, it can be exceedingly difficult to figure out which is the best choice for your specific situation. Point-of-service health insurance is popular for its low costs and robust wellness, but affordability can, unfortunately, come with choice restrictions. Let’s take a look at the ins and outs of point-of-service health insurance and why it might be the ideal option for you.

What Is Point-of-Service Insurance?

A point-of-service (POS) health insurance plan is a hybrid of the two most common health insurance plans: the health maintenance organization (HMO) and the preferred provider organization (PPO). HMOs offer coverage through a network of physicians under contract with the organization in exchange for a monthly or annual fee, also known as a premium; because participants are restricted to this network.  They are usually required to live within a certain region to benefit from using these physicians, as premiums tend to be lower than traditional health insurance. If patients choose to go outside of this network, they are responsible for the full cost of the visit. Visits require either a low deductible or, more commonly, an inexpensive copay. In short, HMOs offer predictable fees and administrative simplicity for patients.

PPOs, on the other hand, allow participants access to a broader range of physicians within their provider network -- which generally spans a larger geographic area -- and don’t require referrals from the participant’s primary care physician (PCP) to see specialists. However, this additional access comes with higher premiums and out-of-pocket costs. Visits can either be paid through a copay or by meeting a patient’s deductible. Depending on the personal and medical needs of the patient, the flexibility of PPOs can be well worth the price.

Point-of-service health insurance plans combine features from both of these plans. Like an HMO, participants are required to choose an in-network primary care provider and can receive referrals if they’re interested in seeing any specialists. And although they aren’t exclusively restricted to using those referrals, the cost is greatly reduced if they go through their PCP. Like a PPO, they are granted access to a wider, more flexible number of physicians and specialists within their network. It is important to note that patients venturing out of their network aren’t forced to pay everything out-of-pocket, although the cost will be more than if they stayed in-network. POS plans only require the payment of a copay before an in-network visit; out-of-network visits usually feature a deductible. An HMO is limited in the funding arrangement for the employer and is based on a capitated fully insured arrangement. POS and PPO typically will provide more funding arrangement options for employers.

Benefits of Point-of-Service Insurance

POS health insurance plans offer a number of benefits over HMOs and PPOs. Here are some benefits to why you may need to choose this insurance option.

• Flexibility: In-network providers in point-of-service insurance plans aren’t limited to a small geographic region. In fact, most POS plans offer nationwide coverage -- a considerable advantage for those who have to travel for work or are concerned about getting sick while on vacation. In addition to having a larger selection of providers, participants have freedom of choice, if they prefer a family doctor that falls outside of their network, they are still able to see that doctor. POS plans encourage participants to utilize in-network providers, but they don’t require it. This is incredibly important because, in today’s ever-changing healthcare landscape, you want to highlight to your employees that you believe in the benefit of personal choice. Point-of-service insurance does just that.
• Affordability: Although premiums for POS plans are not the cheapest of the bunch -that award goes to HMO plans- they are still less expensive than their PPO counterpart. Most of the savings come from a guaranteed in-network copay. While PPOs can require deductibles up to $5,000 and beyond which must be paid before your plan will cover visit costs, POS plans usually offer copays between $10 and $25 per visit. This perk is especially beneficial to younger employees, who may be just starting out in their careers and do not have the extra funds needed for expensive out-of-pocket medical costs.
• Annual Out-of-Pocket Limits: Most visits to out-of-network providers on POS plans will require a deductible to be met before coverage begins, but the average cost is still less compared to PPO deductibles and no coverage whatsoever from HMOs. Additionally, there are limits to how much participants will pay during the year; if that limit is reached, visit and treatment costs are fully covered.

Drawbacks of Point-of-Service Insurance

Of course, point-of-service health insurance plans aren’t perfect. Because of their hybrid nature, understanding POS policies can be overwhelming to the average American; the details of coverage and costs (including what providers and services are in- and out-of-network) can be challenging to fully absorb, which can ultimately lead to a more expensive experience.

The personal circumstances of a participant can also negate the positive aspects of a POS plan. For example, if your long-term primary care provider is not in-network and they are the only doctor you see, you’ll end up paying more in the long run due to your out-of-network deductible.

Pricing can also be an issue. Although POS plan premiums tend to be around 50% cheaper than PPO plans, they can also cost as much as 50% more than HMO premiums. If you don’t understand the tradeoffs of those costs, you won’t be able to take advantage of POS insurance benefits.

Understanding Your Employee’s Needs

The best health insurance plan depends entirely upon the needs of your employees and their family. For many, point-of-service health insurance plans can offer the right insurance coverage at the best price, eliminating excess stress that can sometimes come with high medical costs.

The best funding arrangements of the plans need to be evaluated too. This can have an impact on overall costs and risk.Download our benefits benchmarking report to compare your benefits to your competitors and to find a broker that can help address your needs. Want to discover more Mployer Advisor exclusive content? Check out our blog.

Owning and managing a business can be an unpredictable experience. Planning around the great peaks and sudden valleys of business life can be challenging, but insurance can offer a valuable safety net. Unfortunately, the wide range of insurance policies and coverage alternatives can be difficult to understand. Insurance brokers can bear this load for you, walking business owners and benefits managers alike through the costs and details in order to find the very best selection for their personal circumstances.

What Is the Difference Between a Commission and Brokerage?

Insurance brokers are experts in their field; they provide vital knowledge and support for professionals trying to choose the right insurance policy for their needs in exchange for commission and or additional fees. Commissions are usually based on a percentage of the annual premium (which can vary depending on the policy and insurer) and are included in your monthly premium, paid directly to the broker from the carrier. Fees, however, are often charged for extra services and are paid directly to the broker, typically from the client.

Captive and independent agents represent an insurance company (or companies) and rely entirely on commission; this means that they have a personal incentive to direct clients toward certain insurance carriers. Insurance brokers, on the other hand, represent the individual seeking insurance. Insurance brokers may receive a commission from the insurance company, which sounds like it would make it difficult to garner trust between the broker and the client. On the contrary, the commission continues the longer clients stay with and pay for their policies; the more satisfied a client is with their policy, the longer they’ll stick with it, and the more the broker will make. As a result, client happiness is a major motivating factor for brokers.

Alternatively, some brokers may only charge a broker fee in order to make a profit on the transaction. This serves to override that personal, and financial bias entirely. The base parameter of broker fees is that they must be reasonable, clearly disclosed, and typically must be accepted with a signature.

What Are the Benefits of Using a Brokerage Company?

Whether you’re interested in purchasing business insurance or expanding the benefits offered to your employees, understanding the ins and outs of your options is essential to getting the coverage you need. Insurance brokers are key to this decision. Because they know the market, they’re able to recognize the difference between a great policy and one that is simply adequate. Because they know the law, they’ll be able to protect your business from accidental exposure to serious liabilities, such as bank debt or accounts payable debt. And because they know the industry, insurance brokers are kept up-to-date on the market and the options available for clients.

Although your broker will not be able to finalize a policy transaction, they can provide important insight into a number of different and complicated policy options and help you get the process started. Overall, they will:

• Provide you with a few plans best suited to your needs, as well as one or more premium quotes.
• Discuss alternatives so you’re able to see and understand several plan choices.
• Assist you in implementing the selected plan through the insurance company.
• Service the account, which includes solving billing problems, eligibility issues, and claim interruptions.
• Do the legwork for you, freeing you up to focus on other things.
• Help you get the most from your coverage after it’s been purchased.
• Assist with the renewal process.

Ultimately, the advantages differ based on your position: if you’re a benefits manager concerned about making the right decision for your company, you can rest assured that your recommendation will provide adequate protection and support for your company; if you’re a  business owner, partner or senior officer, you can save time and money by trusting an experienced professional to do the heavy lifting; and if you’re representing a medium-sized business, you can find a partner to walk you through the process without wasting your time.

How Can I Find an Insurance Broker That's Right for My Business?

The complex nature of owning and running a business puts business owners and their representatives at the top of the list to benefit from the experience and expertise offered by an insurance broker.Look for the following qualities when searching for a broker:

• Knowledgeable: Insurance policies are not simple documents. They vary immensely depending on the coverage desired and the insurer’s specific interests. Your insurance broker should be well-versed in the ins and outs of both and should possess the ability to clearly communicate complex terms and topics in an understandable way.

• Trustworthy: Brokers represent their client, not an insurance company. If you feel that your broker is focused more on making money than providing a reliable, professional service with your best interests at heart, it’s time to move on.

• Accessible: As with any professional relationship, it’s vital that your broker return your calls and emails in a timely manner.

• Experienced: Insurance brokers often specialize in certain fields, such as liability insurance or health insurance. You’re going to want to focus on finding one with a background in your industry and company size in order to benefit from an enhanced level of service and expertise.

• Transparent: Brokers who are only interested in making a profit will often conceal or avoid discussing the details surrounding costs, benefits, and everything that falls in between. Honesty and upfront communication is essential to building trust and establishing a successful professional relationship.

Knowing what you’re looking for from a policy is as important as selecting an insurance broker. While you may be overwhelmed by the various options and laborious details, you should have a base understanding of the coverage you’re interested in obtaining. Take the time to do a bit of research on your end; an insurance broker can make solid recommendations but only you are aware of the specific needs of your company.

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At the end of the day, insurance brokers are there to help. Whether you’re looking for assistance understanding the technical minutiae of a certain policy or are starting your search from scratch, an insurance broker can make your journey significantly easier. Although it may seem like extra work, paying attention to broker commissions and fees can improve your comprehension of the function a broker plays and lead to a more positive overall experience.Looking for more exclusive content? Check out what’s trending on the Mployer Advisor blog.

Navigating the business insurance landscape requires guidance, and an insurance broker can handle that research and process for you. But not all brokers are made the same, and some business owners wonder, “Can I change my insurance broker?”

The resounding answer is yes, you can absolutely change your insurance broker. As the insurance-buying client, you can replace the broker managing benefits and insurance for your company.

A good broker will act as an extension of your business, with deep industry expertise and an understanding of your individual needs. Switching to more knowledgeable brokers or advisers could provide a more personalized plan with similar and even lower costs. In most cases, you can also change your insurance broker while keeping the same insurance company and policy.

In this post, we discuss when you should change your insurance broker, what it costs to switch, and how to vet your new insurance broker.

When Should I Change My Insurance Broker?

More than 40% of businesses do not feel satisfied with their current broker, and 21% have changed brokers in the past three years, according to Zywave.

Insurance buyers can easily become dissatisfied with the services of typical insurance brokers, prompting them to want a change. Dissatisfaction can come in many forms, including:

• A lack of tangible value stemming from an insurance broker
• An insurance broker’s lack of knowledge about your industry
• Slow response time or infrequent communication from your broker
• A broker doesn’t understand or appreciate your business’s specific needs for insurance or benefits
• Unwillingness to keep up with technological innovations, such as online business insurance management

At a minimum, you should be able to trust that your broker is finding appropriate coverage for your company. If your broker is not attentive, and doesn't provide valuable and specific insights to you as a client, it may be time to consider a broker change.

The best brokers will ask you thought provoking questions and continually analyze your risk profile, especially during the renewal process. However, if your broker only shows interest when annual renewals arrive, they might not be reliable during an emergency.

Moreover, your insurance advisor's relationship with insurance markets dictates their ability to have meaningful conversations and find competitive quotes. They need to know which policies and benefits best fit your organization and insurance price ranges in your industry.

Your broker should be a partner all year, not just once a year. High quality service providers should talk you through emerging risks and educate you on improved insurance coverage as it becomes available. Nearly 30% of businesses felt their broker lacked an understanding of their company or didn't have expertise in their industry, according to the Zywave survey.

If you experience any of these service problems, you should consider changing your broker. The right broker representative is out there.

What Does It Cost to Change Insurance Brokers?

Businesses might worry that switching insurance brokers could lead to increased premiums for their coverage. This is usually not the case.

In general, you can switch to any broker licensed in your state without additional fees. Plus, it's possible to switch insurance advisors without changing your current policy.

Typically all that is needed to change brokers is an effective dated broker of record letter change on your company letterhead that names the new broker as your new broker of record. This letter is sent to each of your insurance companies' representatives.

The insurance companies will then pay your existing broker commissions until the new broker is named and at that time, the new broker will start to receive the ongoing commissions and be on record to service you as a client with those insurance providers.

In some states that don’t recognize brokers and only have licensed agents, where the agent’s services provided mirror what would be considered typical broker services, this change letter may be called an Agent of Record Letter. Transfer of broker may or may not take place during renewal.

Are you looking for a second opinion on your company’s employee benefits plan? Find a broker that can provide you with a free analysis.

How Do I Know My Insurance Broker Is Working in My Company's Best Interest?

When you hire an insurance broker, they work directly for you–not the insurance companies.

A broker's main duty is to understand your business and find fitting insurance policies within your budget. They should also provide ongoing services to determine if and when to change policies, assist with compliance. Some may help resolve claim issues.Brokers rely on repeat business, so they are financially motivated to choose the best coverage for your company on an ongoing basis. Insurance companies also frequently offer incentives to brokers for policy renewals, so they should work hard to find satisfactory policies from the start.

Good brokers often can provide a procurement process and negotiate lower rates for clients based on their knowledge, history and relationships. But ultimately, insurance contracts are between your business and the insurance company, regardless of the broker who helps manage it. If you are dissatisfied with your broker/advisor, or you suspect they are not doing their best work to aid your business, you should explore your options for changing your representative.

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How Do I Vet an Insurance Broker?

There are about 413,000 insurance brokers and associated businesses in the U.S. as of January 2021, according to IBIS World. That means you have plenty of options to choose from when vetting a new insurance broker.

If you are ready for a change, you will first need to explore your options. The fastest way to find a new broker–whether or not you plan to keep your current insurer – is through Mployer Advisor's proprietary M-Score can show you how different brokers rate in terms of industry expertise, transparency and cost.Looking for more exclusive content? Check out what’s trending on the Mployer Advisor blog.

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Every year, open enrollment allows employees to elect or change benefit options available through their employer, including healthcare benefits, life insurance, disability benefits, and other voluntary or employee-paid benefits. But the opportunity comes just once a year, so many employers wonder if employees have options after missing the deadline.

Typically, employers do not offer health insurance after open enrollment unless the employee has a qualifying life event that allows for a special enrollment period.

For employer-sponsored group health plans, the open enrollment period varies. The window of time for your employees to make health insurance decisions may differ depending on your corporate calendar, your insurance broker, and your health insurance provider.

In this post, we discuss an employer’s role in health insurance enrollment, whether employers can offer insurance after open enrollment, and what leads to special enrollment periods.

What Is Open Enrollment?

Businesses with 50-plus employees that offer health benefits must hold an open enrollment period, according to the ACA. And most small employers also offer an open enrollment period.

Open enrollment is an annual window of time where employees can enroll in, change or cancel employee benefits elections.

During open enrollment, employees can view and make annual elections for insurance and benefit plans that your business offers, such as health, vision, dental, life, and disability insurance plans. They can also make election and amount changes to health savings account (HSA) and flexible spending account (FSA) plans.

These changes could include switching health insurance plans, dropping certain types of coverage, adding dependents, or enrolling in benefits for the first time. Importantly, open enrollment allows your employees to consider the different available health plans you make available, with varying premiums, deductibles, copays, and coverage limits.

Premium rates are reassessed at the renewal date and then reflected in open enrollment as well, with health plan options and prices often changing for the coming benefit year. You can work with your insurance broker or benefits provider to find better and budget-friendly plans, or you can keep the plans you have. In addition, a broker will assist you with setting the appropriate employee premium contribution level.

Before and during enrollment, human resources teams should make sure employees know how much they will contribute to their plan each pay period. And, employees should be well aware of out-of-pocket expenses they may need to pay for healthcare. Your insurance broker or benefits provider can help determine what your employees need to know and educate them on health insurance options.

Open enrollment occurs once per year and typically lasts for a few weeks. Most businesses schedule open enrollment to end a few weeks before they must submit benefits forms to carriers. For calendar-year benefit plans starting Jan. 1, employers tend to hold open enrollment 30-60 days before the new year.

Can an Employer Pick When Open Enrollment Occurs?

Open enrollment for the ACA marketplace happens near the end of the year, but employer-sponsored plans can have different plan year dates and enrollment periods.

The period usually occurs in the fall, but employers have the flexibility so it does not necessarily have to correspond with ACA enrollment or the calendar year.

Open enrollment is also not required to be a certain length of time. However, most small employers have two- to four-week enrollment periods about one to three months prior to policy renewal. Coverage begins at a specified date after open enrollment and usually runs for a full year.

For the best service from your broker or insurance agent, you may want to plan your open enrollment period off-peak. For example, you could hold open enrollment in the spring for health insurance coverage that runs from July 1 to June 30 next year. In addition, you will need to decide if the enrollment will be active or passive. An active enrollment is one where the employee must make a selection for each type of coverage versus passive includes a no change option.

Typically, this open enrollment period is the only time employees can enroll in health benefits or change their coverage.

Can Employers Offer Health Insurance After Enrollment?

If an employee misses your company's health insurance open enrollment period and has not carried over their previous plan, they may not be able to do so until the following year.

Typically, employers cannot offer health insurance to employees outside of open enrollment. Once the business’s open enrollment window closes, employees usually have to wait a year to enroll or make changes.

If an employee is covered under another plan, but that coverage is lost, they can enroll in your plan immediately. Generally, employees have 30 days after they lose the other coverage.

If an employee has a qualifying life event, it could trigger a special enrollment period (SEP) for them.

Depending on the size of your business and how many employees are covered, you could be subject to ACA fines if your workers miss the open enrollment deadline. In addition, prior to ACA,  IRS Section 125 requires an annual election for benefits that include pretax deductions. Missing this deadline means your employees could be unable to acquire employer-run health insurance for a year, unless they sign a waiver stating they are covered under another plan, such as Medicaid. Exceptions are–for the most part–prohibited by the terms of the health insurance agreement. Companies typically have mandatory enrollment, even if it includes an employee declining coverage.

However, there are a few exceptions.

• Most carriers allow a 30-day “grace period” after open enrollment to update selections.
• If an employee is covered under another plan, but that coverage is lost, they can enroll in your plan immediately. Generally, employees have 30 days after they lose the other coverage.
• Employees can enroll in your healthcare insurance plan when they are hired.
• If an employee has a qualifying life event, it could trigger a special enrollment period (SEP) for them.

What Are the Factors That Cause Special Enrollment Periods?

Under specific life-changing circumstances, employees can enroll or change their benefits or insurance plans outside of open enrollment.

If an employee has a qualifying life event, they can be given more time to add, remove or cancel coverage through a special enrollment period. A special enrollment period is a window (usually 60 days) during which you can enroll in health insurance plans, even if it falls outside your company’s open enrollment period.

There are three main categories of qualifying events:

• Loss of health coverage
• Changes in household

• Changes in residence

Loss of health coverage is a qualifying life event and can warrant a special enrollment period. Examples include losing existing health insurance coverage, losing Medicaid eligibility, or expiring COBRA coverage.

Qualifying life events involving changes in household and residence include (but are not limited to):

• Getting married.
• Having or adopting a child.
• Aging out of a parent’s health insurance plan.
• A student moving to attend school.
• Permanently moving somewhere with different insurance options.
• Change household status that changes eligibility for tax credits.
• A seasonal worker moving back from their place of work.

During special enrollment periods, employees generally have the same options as they would during open enrollment. If nothing triggers a special enrollment period, employees usually have to wait until the next open enrollment period to sign up for health insurance.

Working with a qualified insurance broker can help walk you through open enrollment to make sure nobody falls through the gaps or misses an enrollment opportunity.

Looking for more exclusive content? Check out the latest on the Mployer Advisor blog, or read on for an explainer on the benefits of diversity in the workplace.

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Using a broker, consultant, or advisor to find and implement insurance plans for your company is an easy way to save time and money. But many business owners and human resource professionals find it hard to differentiate between a broker, consultant, or advisor when it comes to insurance and employee benefits.

The main differences between an insurance broker and a consultant/advisor are their fee structures and how involved they are with a client beyond insurance purchases and renewals.

Importantly, the broker, consultant, or advisor gets to choose their title – there is no regulatory or licensing distinction. Since a consultant and advisor usually have the same responsibilities to clients, we can generally interchange their definitions.

In this post, we’ll explain the similarities and differences between an insurance broker and an insurance consultant or advisor. Some states also have an Insurance Counselor license which typically applies to Life Insurance advising.

Insurance broker vs. insurance consultant

Both brokers and consultants work with multiple insurance companies, so they tend to have broad options for policy offerings and key benefits. However, business insurance consultants and business insurance brokers do have different responsibilities – primarily in the scope of services they offer to employers.

Traditionally, the difference is that a consultant charges a fee for service, while a broker works on commission. Some brokers are paid solely through commissions for policy purchases and renewals, and some include other fees for additional services. Consultants charge fees and sometimes may offset fees directly with commissions if the client chooses to have the insurer pay the consultant versus paying billable hours or fees directly.

The more important distinction between brokers and consultants is a transactional vs. consultative relationship with your business.

An employee benefit broker’s primary focus is helping you buy and renew insurance and benefit products.

The term “broker,” strictly by definition, historically means “shopping for coverage.” They re-evaluate insurance plans/renewals every year and facilitate insurance one year at a time. Meanwhile, “consultant” and “advisor” describe benefits professionals that offer additional strategic or advisory services for their clients.

A business insurance consultant handles procurement and enrollment, but also manages your company’s collective benefits package in ways that improve your overall human resources strategy and other business objectives.

Many modern insurance broker’s services have evolved and work more like consultants/advisors, working with you throughout the year. Thus, the difference isn’t always straight forward. It is always in your best interest to define the relationship and expectations of the services expected.

Insurance broker main duties

• Has expertise in insurance policies, insurance carriers, and procuring different options for business insurance plans.
• Negotiates lower rates for clients based on their history and relationships, as well as the amount of insurance that they are purchasing.
• Focuses on off-the-shelf products for employers, with pricing offered by third parties, and compares your current plan to other offerings.
• Contacts you ahead of renewal with changes in policies or rates from insurers.
• Provides presentations to staff explaining benefits options and how to use them.

Insurance consultant main duties

• Has expertise in how a business operates and how benefits and HR impact operations and employee management.
• Assist with administrative tasks, including enrollment, onboarding, automation and billing reconciliation.
• Works with decision makers, influencers and other employees to help the insurance-buying team reach a decision.
• Explores options in addition to the cost of plans that can improve financial and operational conditions in your company.

When to use an insurance consultant

Business owners and HR managers are focused elsewhere without the time to become experts in  insurance policies and employee benefits. For most, using an insurance consultant, advisor or broker will save time and total costs compared to going it alone.

A good consultant will understand coverages and policies as they relate specifically to your business, and will find ways to tailor your coverage, maximizing protection and minimizing cost. To earn their fees, consultants should be involved in your plan several times per year – not just during enrollment and renewals.

Put another way, you should use an insurance consultant when you need ongoing expertise about insurance and benefit options, beyond finding and purchasing a policy. A consultant can bring your company a vision and new ideas that shape a strategic HR plan for the future. This may also include actuarial attestation for specific programs.

A consultant is particularly useful when your company’s operations require specialized expertise.

How to find a good insurance broker or consultant

There are about 413,000 insurance consultants, brokers and associated businesses in the U.S. as of January 2021, according to IBIS World. But how do you find the right one?

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When you look for a broker, consultant or advisor, ignore the title. Focus instead on what they do, how well they’ve done it, and how they get paid.

There’s a quick way to find valuable information about brokers in your state. Start your broker search at Mployer Advisor, a free broker marketplace that allows employers to compare brokers, consultants, and advisors in one place, and download our benefits benchmarking report to see how your benefits compare to your competitors.

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There is a lot of confusion surrounding whether or not employee benefits can be taken away from employees without their consent and/or knowledge. To ensure you are as knowledgeable about this topic as possible, here we answer some commonly asked questions concerning the ability of an employer to take away employee benefit plans.

Can Employee Benefits Be Taken Away Without the Employer Knowing?

Simply put, the answer to this question is both yes and no. As an employer, you are not legally able to remove benefits without the employee having some previous knowledge. There are a few different laws and regulations that regulate how employers can cut benefits without informing their employees, as a way to protect employee’s rights. Typically this includes plenty of notice with a legal explanation such as financial problems.

What Benefits Are Protected Under Law?

It is important to understand that some employee benefits are not just perks that inspire your employees to show up to work. Instead, they are a form of contractual compensation that goes hand in hand with their salary, meaning as an employer, you are not able to take away your access to them without some sort of warning. A contract of employment was signed by both of you before the employee’s first day, and it must be followed. Generally speaking, the benefits that employees are entitled to by law include social security, unemployment insurance, family medical leave, and worker’s compensation insurance. So this means that as an employer, you must allow for unpaid family leave if the employee qualifies under FMLA, you must pay unemployment insurance if you terminate the employee, and if the employee is injured on the job, the employer must cover your worker’s compensation.

Additionally, employers are required to withhold state and federal income taxes from an employee’s paycheck, as well as paying a matching amount to Social Security and Medicare tax. If this is not done, any employer can be held liable by the Internal Revenue Service.

All employees are guaranteed the above benefits by law. If an employer removes them, they are liable to legal action.

What Benefits Are Not Mandated By Law?

It can come as a surprise that many benefits are not mandated to be provided by the employer. For example, this means the employer is not legally obligated to provide vacation days and paid time off, retirement savings accounts, life insurance policies, and/or any other perk you may think of. While these benefits tend to be attractive when it comes to attracting top talent to the business, employers can eliminate them for business purposes at any time as there is no legal requirement for these benefits.

Are Employee Benefits Guaranteed Under a Contract?

Some larger companies offer the ability for their employee to join a union, which is meant to help protect employees from certain harmful actions from their employers, including the elimination of benefits. Usually, those in a union have a legal contract set up with the employer that distinctly lists out each benefit they will offer, and the employer is legally responsible to fulfill it.  

Can Employee Benefits Change Based on Demographic?

No, it is illegal for any employer to take away benefits based on an employee’s age, race, gender, and/or sexual preference, to name a few examples. Doing so would be discrimination.

However, there is an important distinction to make here when it comes to providing different pay rates to different employees based on seniority and/or job function.  Employers are allowed to make specific changes to different bands of employees, meaning employees that are full-time compared to those that are part-time or those that are senior managers to entry-level employees. This means different “classes” of employees may have different benefits packages, but employers cannot apply different benefit rules to some employees over others.

Can An Employer Change Compensation Without the Employee’s Consent?

The short answer is no. Again, this is where the employment contract comes into play. This is a legal contract that listed out an agreed-upon wage statement, and a change of compensation without consent would be a breach of contract.

With this in mind, the word “consent” can be confusing. Each state has different laws on how much an employer can change wages while still being within the scope of the contract. Generally, this can range from a 5% to a 15% change, depending on your location. But despite this, as an employer, you still need to provide a brand new employee compensation contract if wages increase or decrease.

Can An Employer Take Away A Bonus?

The answer to this question is maybe. If the bonus is discretionary, your employer may choose to offer it to you for any reason or no reason at all. These bonuses are often presented as gifts around the holidays or are dependent upon company performance. In most cases, if your employer decides to lower or take away a discretionary bonus, you have no legal recourse.

The alternative is non-discretionary bonuses which are based on specific criteria and are legally guaranteed. If this is the case, you may be able to file a claim against your employer for contract violation or failure to pay wages. It is also important to notice if the employee's pay is less than the minimum wage without the bonus.

Bonuses should not be advertised as a specific, guaranteed compensation rate.

Any employer should offer an ample benefits package to their employees, not only to attract top-quality candidates but to retain fantastic employees to your teams for years to come.

Are you curious what employers like you are offering their employees? Download our benefits benchmark report, Mployer Insights to see how your benefits plan stacks up. Looking for more exclusive content? Check out what’s trending on theMployer Advisor blog.

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The Current State of Employee Benefits Benchmarking Reports

The ability to attract and retain top quality talent has increasingly become a major priority among employers operating in an increasingly competitive labor market, and few tools have proven more effective at properly incentivizing current and prospective employees than robust benefits packages which can set a company apart from the competition.

When redesigning and attempting to improve benefits offerings, however, many companies tend to focus their attention almost exclusively on medical benefits, which is understandable given that medical benefits are the largest benefits-related cost component from an employer standpoint.

What many employers fail to recognize, however, is that employees rank financial benefits like 401k contributions and incentives nearly as high as medical benefits in terms of how attractive those kind of benefits package components are from an employee perspective.

In order to create a truly employee-centric offering that is optimized to attract the ideal candidates from the labor pool, a company must evaluate all the potential components of a benefits package, including:

• Medical (health, dental, vision, FSA, retiree benefits)
• Short & Long Term Disability
• Life insurance
• Leave benefits (sick, vacation, holiday, and various other leave like jury duty, un-paid leave), etc.

Of course, no benefits package regardless of its components can be fairly evaluated in a vacuum. In order to understand how best to craft the optimal benefits package for a given company, that benefits package must be compared with the benefits packages being offered by other similarly situated companies who are competing to attract the same talent.

This is where employee benefits benchmarking reports comes into play and have become an essential process for competitive companies to undertake.

What Is Benchmarking and How Is it Done?

Benchmarking in its simplest form is the exercise of comparing one company to another. In our case, we’re interested in comparing the benefits packages offered to employees by different employers, but the principle is the same whether comparing companies’ products and services or informal perks.

The key input that makes benchmarking possible is comp. data. Of course, any given company should have up-to-date information about its own benefits packages readily available, but gathering comparable information about the business and practices of competitors is typically a much more difficult task.

Further, not only can it be difficult to gather data in general, but it can be especially tricky to gather relevant data, that is, data from companies that are in the same industry and of a similar size. Even factors like geography can have significant impacts on benchmarking data, so it is extremely important that the data being used is well-tailored to the company/industry/location in question in order for the benchmarking comparison to provide meaningful, actionable results.

It’s also very important that the data is unbiased, which can be sometimes be difficult to determine given the often-misaligned financial incentives of data collectors and providers, which reinforces that properly assessing the source and quality of the data is a critical step in the benchmarking process.

What Benefit Benchmarking Resources Are Available Today?

There is no shortage of benefit benchmarking data available, which can be both a good and a bad thing. Having a lot of data available is great in the sense that there is a wealth of information from which valuable insights can be gleaned, but one of the reasons that there is so much data in the first place is because it is being supplied by a huge number of sources with inconsistent reporting, methodology, motivations & target audiences, differing definitions, data sources, samples & time frames, etc.

With that caveat in mind, for Small Business Benefit Benchmarking data, Zenefits produces a great survey focused on health benefits that is excellent for understanding small business trends in medical and plan design. It should be noted, however, that Zenefits is an insurance broker, which is primarily how they monetize their platform, and the sample set in the data is Zenefits own users who may or may not share similar characteristics with your company.

For information about Insurance Broker Benchmarking, Mercer Data is a great resource targeting companies that employ 500+ employees and encompassing in depth plan design, planning, discussion and consulting.For Payer Benchmarking, it is typically larger carriers who produce segment specific reports. Alfac and Cigna have historically put out great voluntary and health information respectively, for example. Because that information is siloed and apart from any comparable data covering other benefits package components, however, it is difficult to use this data to draw conclusions and take actions in a cohesive way across a full benefit plan design and offering.

There is also a fair amount of Benchmarking Data from Enrollment Firms, which is typically pulled directly from the firms’ clientele and their plan choices. The quality and applicability of this data can vary widely from firm to firm, any one of which may specialize in certain types of companies or industries and/or may exclusively operate in one or more geographic areas with particular characteristics.

Problems in the Current State of Benefits Benchmarking

As alluded in the paragraphs above and through much of our exploration of the available benchmarking data resources generally, sourcing relevant and unbiased information were two of the main challenges to effective benchmarking that we continually encountered over and over again.

In terms of bias, it is important to be aware at the outset of the process that nearly all benchmarking information today is provided by someone with a financial interest in your company choosing one plan over another.

To be clear, this isn’t to say that the data has been manipulated or framed to be deliberately misleading, but strong financial incentives can have practical effects even if they aren’t being actively considered or even acknowledged. This situation is not unlike a scorekeeper for a basketball game also playing for the opposing team. The arrangement itself is not evidence of any wrongdoing or malicious intent, but it certainly should raise questions and it serves to highlight the fact that there is no independent resource to fill this needed role.

Beyond bias, there are also issues involving the relevancy of benchmarking data, which typically involve data that is incomplete, over-broad, and/or non-actionable:

• Incomplete data is a dataset that lacks information necessary to convey a whole and complete picture. For an example from the employee-benefits space, none of the resources for benchmarking data that are publicly available provide an end-to-end analysis of all major package components covering medical, disability, life, leave and retirement – all of which can greatly impact the decision-making of current and prospective employees.
• Over-broad data is information that lacks a level of specificity that would enable the drawing of direct comparisons between the collected data and the unique circumstances of an individual company. Most publicly available benefits benchmarking data is generic and rolled up across industries, location, and company size, but for data and the conclusions drawn from it to be meaningful, the analysis must be micro-targeted and customized to align with the attributes of your particular business.
• Non-actionable data covers any data that is incapable of providing a solid analytical foundation that could support any particular decision or course of action as a result. Non-actionable data as a category includes a lot of both incomplete and overbroad data sets while also covering information that may be made up of valid survey results, for example, but an assessment of that information alone could not fairly be used as justification for making one choice over another.

The Biggest Problem With the Current State of Benefits Benchmarking

It’s also very important that companies recognize that while the technical, data-based issues of relevancy and bias are certainly considerable hurdles to overcome when evaluating benefit offerings, the far greater issue that most companies face is less a technical problem than a problem of perception and communication.

After all, even the best imaginable benchmarking dataset is of little value in terms of attracting and retaining quality employees if an employer is unable to effectively communicate the value of their benefit offerings in a way that is compelling to the specific prospective or current employees in question.

Consider this example provided by a fellow MployerAdvisor staff member:

I have a great friend whose company covers 100% of medical for all employees. She is evaluating taking a job with a 12% raise but has to pay for medical. At the end of the day, is that a pay raise? She doesn’t value the benefits being offered to her, but it’s not her fault. Her company is not able to communicate to her the value of the benefits and much less how that compares to the market.

In the example above, the employer does all the hard work and is offering a significant benefit but has failed to communicate the value they are providing and therefore the positive impact of that work in terms of employee retention is lost altogether.

It should also be noted that employees’ expectations and their impression of any given benefits package component can be significantly influenced not only by the information being provided (or not) by the employer but also information from outside sources can have a major impact as well. In a sense, employees sometimes undertake their own approximated benchmarking effort through social circles and their industry network, though the limited sample regularly leads to a skewed perception of where their benefits package may actually fall on the market spectrum.

Regardless of the reasons why employees may not fully appreciate the value of some benefits offerings, the most important takeaway is that in order for benefits packages to have their intended effect in terms of talent attraction and retention, those benefits must not only provide real value to current and prospective employees but that value must also be effectively conveyed so that it can be internalized and comprehended by the recipients on a practical level.

Benchmarking With Mployer Advisor

Given our encounters with the shortcomings of publicly available benefits benchmarking data, and given our data processing capabilities and our uniquely independent positioning in the industry, Mployer Advisor recognized that we have the opportunity to address the bias, relevancy, and communication issues hampering the industry by launching our own, independent benchmarking platform and accompanying resources.

Mployer Advisor was founded to address inefficiencies in the insurance and brokerage marketplace and to support both employers and advisors with better information leading to better outcomes for everyone involved. Because our company generates revenue exclusively through advertising on our platform, which is an opportunity we offer exclusively to highly-rated insurance advisors, there are no concerns about any conflicts of interest in our data.

And relevancy is no issue since our benchmarking information is tailored for you down to the company size, geography and industry, and your custom snapshot is updated annually with information pulled from the largest benefit design database in the US processed through industry-first statistical modeling to provide the most granular, micro-targeted assessment the industry has ever had access to.

As with everything we do at Mployer Advisor, our goal in offering benchmarking and analytics information is simply to improve the employee benefit and insurance industries. We believe that better information and greater transparency lead to increased efficiency which leads to improved performance and more business.Click here to download your customized benchmark report.

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Insurance coverage can provide a vital safety net for employees in businesses of all sizes. Because extra benefits and insurance options can significantly contribute to employee happiness and their dedication to the company, it’s in every business’s best interest to understand what supplemental coverage their employees desire. Spousal life insurance is a common type of this additional insurance. By providing your employees with the option to obtain a financial safety net in the event of sudden and unexpected death, you are showing them that you care about their needs.

Let’s take a closer look at the details surrounding spousal group life insurance.

Understanding the Ins and Outs of Spouse Group Life Insurance

Spouse life insurance is a form of dependent life insurance and can be defined simply as group life insurance coverage that is purchased for a partner or spouse. Beneficiaries are named to receive a payout, known as a death benefit, in the event of a loved one’s untimely death. The goal of the death benefit is to ensure that surviving family members are not left with overwhelming financial burdens such as mortgage payments, funeral costs, and cost of living.  This is a specific benefit meant just for the spouse, but not other beneficiaries such as children.

What Spousal Insurance Options Are Available?

When an employee makes an annual election for coverage, they will also be able to make an election to cover their Spouse. This option is usually in flat dollar amounts. $15,000 to $150,000 of Group Term Spousal Life Insurance Coverage. Size of the group and the age gender mix of the group will determine the maximum amount of coverage made available.

What Factors Affect Life Insurance Rates?

Because life insurance results in a significant payout should the policyholder pass away, insurers need to take a number of factors into consideration when determining the cost of an individual’s monthly payment. This essentially equates to the amount of risk a buyer presents.

Typically, because group insurance risk is spread out among the whole group and levels of coverage are determined at a guaranteed issue level, there usually is not health information required.

However; the insurance company does consider the following factors when looking at a group life coverage census:

• Age: Insurers know that young people are far less likely to suffer from sudden health problems and will most likely be paying into their policy for years before it gets paid out. As a result, they pose the least amount of risk and benefit from lower premiums.
• Gender: Insurers and insurance carriers rely on statistical models when determining risk. Because women live an average of five years longer than men and therefore will spend additional time paying their premiums, their premiums tend to be lower.
• Smoking: Smoker and non-smoker rates may be offered.

How Can My Employees Buy Spousal Life Insurance?

Much like health insurance, if spouse group life insurance is offered, it can only be purchased during open enrollment or after certain qualifying events that allow for special enrollment. Unlike health insurance, however, coverage may not begin immediately; for example, a policy that was purchased for your spouse during open enrollment (November 1st to December 15th) may not go into effect until January 1st.

If spousal group life Insurance is not offered, the spouse can purchase individual life insurance through an insurance agent. In addition, voluntary individual employee pay and all payroll deducted coverage could also be considered. These are typically not considered group life plans. Both options are typically more in premium for the spouse than group term spousal life coverage.

Giving your employees the option of enrolling in spouse life insurance communicates that you understand their personal needs; because spouse life insurance can guarantee the protection of a household’s wellbeing should something sudden and unexpected occur, you will be providing an essential form of financial support. Whether you’re a benefits manager at a large corporation or a small business owner with a handful of employees, your workers will see your dedication to their livelihood and financial security. Are your competitors offering their employees spouse life insurance?

Download your custom benefits benchmark report to see which benefits employers within your industry, location and company size are offering their employees. Looking for more exclusive content? Check out what’s trending on the Mployer Advisor blog, and be sure to catch the latest episode of This Week in Benefits.  

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Insurance brokers can help your business choose policies and coverage types that make the most sense for you. Their job is to help clients understand their liabilities and how those risks can be managed through proper insurance coverage.

Insurance brokers do not sell insurance, but they can find insurance companies and coverage policies that align with your business, and then negotiate with multiple insurers to find competitive rates.

To finalize and initiate a business insurance policy, you or your insurance broker will need an insurance agent working on behalf of the insurer to close the deal.

In this post, we explain the difference between insurance agents and brokers, who pays an insurance broker, and companies’ requirements for business insurance.

What are insurance agents and insurance brokers?

Insurance brokers help you review and shop insurance and benefits policies best suited for your needs and your budget.

The main difference between an insurance broker and an insurance agent is whom they represent. Insurance agents represent one or more insurance companies, but when you hire an insurance broker, they work directly for you not the insurer.

While independent agents work with more than one insurer, they have contracts with companies that often limit them to selling certain policies. Brokers, meanwhile, can solicit price quotes from multiple insurers. So, you can think of an insurance broker as an intermediary between insurers and businesses, with no stakeholder interest in the policy itself.

Importantly, you can't buy insurance from an insurance broker, but they can help you find the best policies and manage claims. Put another way, an insurance broker cannot complete the sale of a policy that right is reserved by the insurance agent or insurance company. Once a broker has done all of their research and presented their clients with options, the policy selected must be bound by an insurance agent or company.

Independent agents and brokers approach their work similarly, because they can offer several policy options from multiple insurers. Captive insurance agents, meanwhile, work on behalf of a single insurer, and brokers are not contracted with any insurers.

Are companies required to use insurance agents?

Regulations require each company with employees to have workers’ compensation insurance, and most states have additional requirements. These typically include policies such as general liability for lawsuits or business property insurance for workspaces and equipment.

In some cases, you are legally required to purchase certain types of business insurance. Since insurance companies may require state licensed insurance agents to sell their products, companies purchasing business insurance may be required to use insurance agents.

Some states do not recognize brokers and only license agents for insurance. With insurance being state regulated, each state handles brokers and agents all differently.

Many insurers rely on agents and brokers to distribute their business insurance products. They don't often sell policies directly to businesses, due to regulations and industry best practices. If you do not use a broker, you will most likely have an assigned agent at each company you contact.

To initiate policy coverage for a business, a broker or agent must obtain a binder signed by an underwriter or other representative of the insurer.

The type of license an agent or broker needs depends on the state and the type of insurance coverage required.

Good brokers and agents stay on top of legislation changes and tax reforms, making sure your policies are up to date. They can help ensure you are covered for unexpected legal and tax issues related to your insurance benefits.

Who pays an insurance broker?

An insurance broker makes money from commissions when your business buys and renews policies from insurance companies, along with any broker fees, if applicable. They may charge both commissions and fees, or only a commission.

Insurance broker commissions

Commissions are typically included in the price of the annual premium charged by insurers to policyholders. These could include base commissions and supplemental commissions, which are smaller, ongoing annual payments.

Most commissions fall between 2% and 8% of premiums, according to Investopedia.

Insurance broker fees

Brokers may also be paid broker fees, which can be combined with a commission structure.

Broker fees are usually non-refundable, so your money will not be returned if you cancel your policy mid-term, unless your insurance broker was dishonest or broke your contract. Fees are generally paid directly to the broker, but in some cases are included in annual premiums.

You should know if your broker or agent charges fees, and what those fees are, before they start searching for insurance policies on your behalf.

Connect me with a broker

Are you ready to find a top rated insurance broker that can find you a cost effective policy that best fits your needs? Search for a broker with Mployer Advisor’s online broker marketplace.Looking for more exclusive content? Check out what’s trending on the Mployer Advisor blog, and be sure to catch the latest episode of This Week in Benefits.

While brokers can save you time and money, they are compensated for their services. Not all brokers are made the same, and the commissions or fees they collect may be different.

Insurance brokers typically are compensated a commission fee based on a percentage of the policy premium. The commissions are usually paid by the insurance company, not the buyer.

In this post, we explain fees and commissions for insurance brokers, how they get paid, and how much you can expect to pay for brokerage services.

How do you pay an insurance broker?

An insurance broker typically makes money from agreed-upon commissions when your company buys and renews policies from insurance companies.

In most cases, commissions are paid by the insurance company that the employer chooses. It is usually a percentage of the premium for the policy, and may or may not be already built into the retention component of the premium cost.

Payments to your insurance broker could include both base commissions and supplemental or override commissions.

Most commissions fall between 2% and 8% of premiums, according to Investopedia.

Negotiating fees and commissions for your business insurance broker may be possible, and is dependent on the size of your company along with the internal incentive policies of your insurance provider.

Some brokers are contracted for several years, so you might need to pay broker fees through the contract term, regardless of policy changes, unless the broker violated your contract. Your policy could also contain a "short-rate cancellation fee," by which you would owe your insurance company money for cancelling your policy midterm. It is important to know the terms of your agreement.

Insurance brokers do not sell insurance, but they can find insurance companies and coverage policies that align with your business. To finalize and initiate a business insurance policy, your broker will need an insurance agent or insurance carrier.

Broker fees

Some brokers are paid solely through commissions for policy purchases and renewals, and some include other fees.  Some states have restrictions on these non-commission payments but broker fees rarely eclipse more than 15% of the premium.

Broker fees can be combined with a commission structure, and should be disclosed to you upfront.

Sometimes, brokers will charge fees as they take on consultant (or advisor) roles, providing ongoing services to help determine if policies should change, assist you with compliance, and help submit claims and receive benefits. You should know if your broker or agent charges fees, and what those fees are, before they start searching for insurance policies on your behalf.

The fee may be a similar amount to the commission they could have earned, and unlike commissions, it doesn't come from the insurer.

Broker fees are usually non-refundable, so you will still have to pay if you cancel your policy mid-term, unless your insurance broker violated your contract. Again, it is important to know your contract fees and terms.

Even with commissions and fees, a good broker adds significant value.

Do insurance brokers have my best interest?

You might wonder if insurance brokers have your best interest at heart. In most cases, they do.

When you hire an insurance broker, they work directly for you – not the insurance companies.

Brokers also rely on repeat and referral business, so they are financially motivated to choose coverage that your company will keep renewing for a long time. Insurance companies often offer incentives to brokers for policy renewals as well, so they should work in your best interests to find satisfactory insurance plans.

On the other hand, since they are paid by commissions based on premium costs, brokers could be incentivized to add unnecessary coverages.

You should be able to trust that your broker is finding appropriate coverage for your company. If they are not attentive, do not provide valuable advice, or only appear when renewals are coming up, it may be time to browse other options.

There are very good professional brokers in your market. With that said, broker relationships do change. If you are not satisfied, know that more than 40% of businesses do not feel satisfied with their current broker, and 21% have changed brokers in the past three years, according to Zywave.

In general, you can switch to any broker licensed in your state without additional fees. Plus, it is possible to switch insurance advisors without changing your current policy. Changing to more knowledgeable brokers or advisers could provide a more personalized plan with similar costs.

How do I understand the fees and commissions my insurance broker is paid?

Insurance buyers should compare brokers and consultants based on professionalism, demonstrated knowledge in insurance, understanding of your industry, transparency and cost.

To avoid unexpected costs, you should know fees upfront, examine your broker’s relationship with insurers, and understand the difference between insurance brokers and insurance agents.

Employers should know how their brokers are paid, but insurance policies are seldom simple, so you will need to ask about every potential fee or commission. These include contingent and supplemental or override type commissions. Good brokers have no issue with transparency.

When evaluating and choosing  insurance brokers, be sure to explore benchmarking studies that give you an understanding of who is out there and how much you should pay. Mployer Advisor’s proprietary M-Score can show you how different brokers rate in terms of industry expertise, transparency and cost.Looking for more exclusive content? Check out what’s trending on the Mployer Advisor blog, or read "Can an Insurance Broker Save My Company Money?" for more information on insurance brokers.

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Everyone Wants a Good Insurance Broker

The first step toward determining what makes an insurance broker good is to define what it means to be a good insurance broker in the first place.

As with most qualitative assessments, what constitutes ‘good’ in this context may vary widely depending on one’s perspective. For example, from the perspective of insurance providers, a good broker might largely be defined as a great salesman who maximizes client satisfaction and retention while simultaneously minimizing claims paid out.

On the other hand, from the perspective of the company engaging a broker in order to procure commercial insurance coverage for their business and employees, the definition of what makes a broker good might be the polar opposite from the attributes and skills that the insurance provider is looking for in a good broker.

For our purposes here, the focus will remain on evaluating brokers from the perspective of the companies who are procuring insurance coverage. However, what makes for a good insurance broker can still vary considerably depending on a number of factors, including the size, market, preferences, and the specific insurance needs of any given business.

The Broker That Can Get You the Best Price

Many companies view insurance coverage as an expense to be minimized on their balance sheet, unrelated to the functioning operation of their core business. These particularly price-conscious insurance shoppers who prioritize low rates above any other consideration might define a good broker as the one who can get their company the best insurance deal possible.

Of course, how to define the ‘best’ deal requires some parsing out, as well, given the best deal in the short term may not be the best deal in the long term. Defining the ‘best deal’ would also depend upon a given company’s risk tolerance and what claims are ultimately made over the life of the policy, etc.

For the sake of simplification, however, let’s assume that ‘best deal’ means the lowest possible upfront rates for standard coverage.

Even with this simplified definition, however, merely finding the best rates may be trickier than anticipated. In some markets, for example, where businesses are seeking standard types of insurance protection with little to no company-specific customization required in their coverage plans - those companies may be surprised to find that they keep getting the same quotes from brokers representing the same payers with little price or coverage fluctuation.

In those circumstances, these standardized coverage options have become essentially commodified, which means finding a good insurance broker (or at least one that is relatively better than other available options) will require using other criteria by which to evaluate potential new insurance brokers.

The Broker Who Can Get You the Most Comprehensive Coverage

On the opposite end of the spectrum from the broker who can quote the cheapest rates is the broker who can offer the most comprehensive coverage.

Of course, implicit in the notion of comprehensive coverage is that the coverage, while thorough, is tailored to suit the specific needs of your company and not superfluous or excessive in the operation of your business. Few would label a broker as ‘good’ simply because they sold you any and every type of insurance imaginable whether you needed it or not.

Therefore, the key to a good broker offering comprehensive coverage is the ability of that broker to accurately and specifically identify the needs of your business in order to shape an insurance coverage package that addresses all of your business’s areas of concern without going overboard into the unnecessary.

In this light, a good insurance broker might be one who is thoroughly versed in your industry. This could be either through direct experience or from comprehensively learning the space in order to provide the appropriate guidance to your company.How Can a New Insurance Broker Help My Business?

The Broker Who Can Be Your Champion and Advocate

The other main idea implicit in the concept of comprehensive coverage is that you will in fact be covered and paid out for the events and incidents to which your company wished to limit its exposure. After all, what appears to be comprehensive coverage when crafting the policies initially may be of little value in situations when the insurance provider disputes that an event in question is actually covered.

Here, a good insurance broker might be defined by their ability to accurately anticipate and explain the scope of coverage so that there is no misunderstanding about when and how that coverage either will or won’t apply.

This definition of a good broker again harkens back to their experience or learned knowledge of your company’s industry and risk exposure. It also brings up a new consideration: the role of an insurance broker as an advocate for their clients, even when promoting a position adversarial to the position being taken by the payer in a given instance.

To be a good insurance broker in this regard is to put the client’s interests first and to champion their clients whether it be in seeking payment for claims, in making a case for reduced premium rates, and in any other cases where the interests of the clients and the providers may conflict.

For those companies interested in whether or not their current or potential broker meets this particular definition, it might be wise to simply ask for examples of when that broker has taken a position on behalf of their clients against the payer’s interest and gotten favorable results to their clients’ benefit.

The Broker Who Keeps Their Clients Satisfied

Perhaps the most important attribute when defining a good insurance broker, and not coincidentally the only aspect listed that overlaps with an insurance provider’s definition of a good broker, is a broker that keeps their clients satisfied.

Presumably, client satisfaction is encompassed in all the good broker qualities discussed here thus far. For example, if a broker can’t get their clients a good rate quote, isn’t knowledgeable about their client's business, is therefore unable to tailor a comprehensive coverage package, and won’t be an effective advocate for their client's interest – then it’s unlikely that broker meets the threshold to be considered good in this context.

That said, beyond these previously discussed considerations, there are a number of other factors that brokers will likely have to meet in order to keep their clients satisfied. Managing communications comes to mind first and foremost, both in terms of regular communications under normal circumstances as well as communications in times of emergency when claims are being filed, which tend to be a regular occurrence in the insurance industry and require a greater sense of urgency.

Beyond the timing and effectiveness of communications, the tone of communications can be very important and speaks to other issues like culture, emotional intelligence, and the importance of building a productive working relationship between broker and client for maximum client satisfaction. This can be tricky when not all clients have the same expectations about the ideal form that such a relationship ought to take.

Recap: What Makes an Insurance Broker Good?

A good insurance broker will most likely get you a rate quote that you’re happy with, which may be fairly simple and commodified or relatively intricate and complex depending on your particular business.

A good broker will certainly be experienced in your field or at the very least eager to learn and independently research the area in order to make sure your coverage is appropriately comprehensive without making you pay for overkill coverage that you don’t really need.

Also, a good broker will certainly be a strong advocate on behalf of their clients whenever there is conflict with the insurance provider. Additionally, a good broker will keep their clients satisfied with their services through effective communication, culture, and relationship-building.

Most importantly, what you need is not a ‘good’ broker in the first place. What you need is an insurance broker that’s best for you.

There is no one-size-fits all definition of a good broker that will apply in any and all cases. With these ideas in mind, the best way to determine the broker that can best serve your company in administering your insurance needs is to first identify what aspects and attributes are most important to your company. Then, start narrowing your search by the criteria that you’ve chosen to prioritize by asking a lot of questions of as many brokers as you see fit.

How to Find the Best Insurance Broker for Your Company

To search for insurance brokers by geography, specialty, rating, provider affiliates, customer satisfaction or other relevant criteria you may have deemed to be important, search Mployer Advisor.

We help employers find top-rated insurance brokers for their needs. In addition to broker listings, Mployer Advisor showcases customer reviews and feedback to help employers compare and evaluate different brokers. Start your search today.Find Top-Rated Brokers Near You

About Mployer Advisor

At Mployer Advisor, our focus is creating transparency in the insurance and insurance broker, consultant and advisor space to the advantage of the employer. Analytics is our core and we will bring to light new information, tools and resources to aid employers in making more cost-effective decisions. As a phase I, we are here to help employers find the right broker or consultant and the right insurance company for them. Giving choice and initial transparency is a first step in creating an employer centric insurance marketplace.

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It's no secret that healthcare costs have risen dramatically over the past several decades; in fact, according to the Kaiser Family Foundation (KFF) healthcare spending rose nearly a trillion dollars between 2009 to 2019 when adjusted for inflation.  

In 2019, according to the KFF’s report estimates, healthcare spending in 2019 almost hit $3.8 billion–which comes out to about $11,582 per person. By 2028, these costs are expected to reach $6.2 trillion, or about $18,000 per person. For a closer look at the cost breakdown in healthcare spending in 2020, check out these handy charts from the American Medical Association.  

With such excessive costs to contend with, employers nationwide are searching eagerly for ways to control costs without negatively affecting employees’ access to sound healthcare coverage. As such, more and more companies are choosing to set aside funds to pay for employees’ healthcare instead of offering a more traditional group healthcare plan.  

When weighing the best plan and healthcare strategy for your workforce, savvy employers nationwide often investigate the differences between healthcare plans that are fully insured or self-funded.

What Is the Difference Between Fully Insured vs. Self-Funded?

Fully Insured Plans

A fully insured health plan is a more traditional route of insuring employees. Employers pay a fixed premium to a carrier that will cover the employees’ medical claims. Although they can be more expensive, employers can save money by providing exceptional service to keep them happy and healthy, which can serve as a powerful tool to attract and retain talent.  

In fully insured health plans, employers pay a premium to the insurance carrier. The premium rates are annually fixed based on your enrolled employees in the plan each month and will only change if your number of employees changes. Employees are required to pay their deductibles or copays.

The main downside when choosing a fully insured health plan is that it stops you from customizing your health plan completely. However, this option does eliminate the administrative duties and expenses often associated with a self-insured health plan. The insurance carrier deals with the employee claims, resulting in lower risk for the employer too.

Self-Funded Plans

When selecting a self-funded health plan, also known as a self-insured health plan, the employer runs the health plan and assumes all the financial risk for providing benefits to employees. Self-funded plans are more flexible than fully insured plans because they give you the potential to design a healthcare plan that meets all employee needs; self-funded plans can also reduce the cost of premiums as a result.

However, if opting for a self-funded health plan, employers must calculate the fixed and variable costs for the plan. Costs can include administrative fees, stop-loss premiums, and other set fees. Additional costs include healthcare claim payouts that vary each month and are contingent on submissions from employees and dependents.

To mitigate the financial risk mentioned above from a self-insured health plan, employers can implement stop-loss or excess-loss insurance, which reimburses the holder for claims that exceed a set amount. This can be used to cover claims for one covered individual or cover claims that exceed the level for a group of covered employees.  

Although self-funded plans can save employers money, self-funded plans require more planning and likely warrant a dedicated internal team to navigate the inherent complexities.  

Which Plan Is Right for You?

If you want to know more about which plan type is right for your business, the next step is to connect with a top-rated, experienced employee benefits broker.  

Looking for more exclusive content? Listen to our latest episode of This Week in Benefits, and check out our By the Numbers blog series.

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Benefits packages are essential to the modern worker. No matter what industry your company is in, offering a robust retirement plan, an excellent paid time off policy, and extensive health coverage can provide comfort and security for your employees -- especially during a pandemic; however, these benefits incur additional costs that some businesses might not be able to manage or justify. Considering how vital and valuable benefits are to employees, is it possible for businesses to change or remove them without notice? Let’s take a closer look.

Understanding the Law

Prior to the establishment of the Affordable Care Act (ACA), businesses were not required to offer health insurance coverage to their workers. Now, providing health insurance coverage is mandated by law if you have 50 or more employees and has become standard practice if businesses want to attract and keep the best employees.

The Employee Retirement Income Security Act of 1974 (also known as ERISA) is a federal law that was enacted to protect individuals participating in most voluntarily established retirement and health plans in private industry. It performs four fundamental functions:

• Requires plans to provide participants with information regarding plan features and funding
• Provides fiduciary responsibilities to the individuals who control and manage plan assets
• Requires plans to establish a grievance and appeals process
• Gives participants the right to sue for benefits and breaches of fiduciary duty, which is an obligation to act in the best interest of another party.

Changes to health insurance plans and benefits coverage are legally known as material reductions and refer to any plan modifications that would be considered by the average participant to be an important or significant change. According to the Employee Benefits Security Administration (EBSA) this includes any plan modification or change that:

...eliminates benefits payable under the plan; reduces benefits payable under the plan, including a reduction that occurs as a result of a change in formulas, methodologies, or schedules that serve as the basis for making benefit determinations; increases premiums, deductibles, coinsurance, copayments, or other amounts to be paid by a participant or beneficiary; reduces the service area covered by a health maintenance organization; establishes new conditions or requirements (e.g., preauthorization requirements) to obtaining services or benefits under the plan.

Under ERISA, employers are required to give 60 days’ notice prior to any material modification scheduled to take place. This includes informing workers of their right to purchase a temporary extension of group health coverage (like COBRA) if a qualifying event occurs. If material modifications, rather than reductions, are going into effect, employers have until no later than 210 days after the end of the plan year in which the change is adopted to inform employees.

Unfortunately, the world of insurance isn’t always easy to understand; whether you’re a small business owner who is simply trying to find a solution so you can get back to the actual work or a benefits manager who wants to make sure they choose the right coverage for their company’s needs, you might need support from an insurance broker to explain the nuances of business insurance and employee benefits, especially considering the potential legal and financial consequences surrounding any mistakes.

Exigent Circumstances

Certain pressing situations can force companies to alter or, more commonly, reduce their benefits plans and health insurance coverage out of financial necessity. Because most benefits packages are a combination of mandated and fringe benefits, the latter is the first to be reduced or eliminated if a company has a budget reduction.

Fringe benefits are usually offered for recruiting and retention of workers. Some may include generous paid time off policies, tuition reimbursement, and even a company car.

When the business climate is slow or worse, in a recession the following can be a result:

Layoffs

Understandably, the loss of employment translates to a loss in coverage if coverage is supplied by the employer. The Worker Adjustment and Retraining Notification Act (WARN) requires businesses with 100 or more employees (excluding those who have worked less than six of the last 12 months and those who, on average, work less than 20 hours a week) to provide 60 days’ advance written notice of the upcoming layoffs. Several states have applied similar legislation to small businesses, allowing employees from all backgrounds time to find alternative coverage solutions.

Furloughs

Furloughs have become common since the arrival of COVID-19. Because they are performed to save a business money, or sustain its survival, this option is often turned to after the elimination of fringe benefits. In most cases, businesses attempt to continue health coverage throughout the furlough.

Pay Cuts

If a business is facing financial hardship, reducing employee pay can be a more practical alternative to layoffs. While it can be demoralizing, employees usually won’t lose their health insurance coverage -- although they may be forced to pay more toward their premiums each month.

Such severe circumstances can cause significant changes in an employee’s life. While losing your job or the salary you’ve grown accustomed to can be difficult, most people won’t need to worry about losing their health insurance coverage -- at least not immediately. As a business owner, it is your responsibility to let your workers know of any major changes that will affect their wages or employment status.

Employer Limitations

The legalities surrounding company-sponsored insurance are clear cut; if benefits are being reduced, notification is required within 60 days of the adoption of such reductions. While you can be on the hook if they fail to inform your employees of these changes, things get considerably messier if the changes are based on discrimination. No employer is able to decide who gets health benefits and who doesn’t because of age, gender, race, or current health condition. The only distinction that can be made is between part-time and full-time employees; anything beyond that in most scenarios is forbidden by federal laws.

The Takeaways

Can employers make changes to their benefits plans? Yes. Can they do so without informing their employees? Absolutely not. Whether you’re a benefits manager at a massive corporation or a small business owner with six employees, you are allowed to rescind or limit benefits for a number of reasons, including something as simple as the maintenance of insurance costs.

However, you are required to give notice to your employees within a specific time frame; this flow of information allows current workers to find new coverage or supplement any expected loss in time to prevent gaps in coverage while also serving to maintain trust and goodwill between the two parties.Looking for more exclusive content? Check out what’s trending on the Mployer Advisor blog, and be sure to read more about the importance of employee benefits plans here.

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Small businesses have many options to consider for health insurance benefits, including their impact on business taxes. Plenty of business expenses are eligible for tax write-offs, so many employers wonder whether health insurance premiums can be deducted.

Fortunately, small businesses can deduct most of their health insurance premiums and other expenses from their federal business taxes.

There are several ways employers might be able to write off health insurance-related expenses or deduct them from your year-end taxes.

In this post, we explore how employers can take advantage of tax benefits for various health insurance scenarios, including HSAs, tax credits, and deducting premiums.

How Can Small Businesses Deduct Health Insurance Premiums?

All small employers need to report the value of employees’ health insurance coverage on their W-2 tax form. This way, the government can incentivize companies to provide qualified health plans by offering ways to lower taxes.

The contributions made to employees’ small group health insurance benefits are tax-exempt. That means health insurance premiums paid by an employer are not subject to income or other taxes.

The amount that a company spends offering group health insurance for employees (or making contributions to their healthcare costs) can usually be fully deducted as a business expense. So, the amount you pay toward employee healthcare premiums is usually tax deductible. The contributions you make to employees’ premiums are considered a business expense by the IRS, giving you the ability to write off that cost.

To use this deduction, employers typically must pay at least half of their full-time equivalent employees’ premiums. You should consider all employees who perform services during the tax year when determining your number of full-time equivalent employees, and calculate the average annual salaries and premiums paid. You are not required to make payments toward dependent premiums to receive a tax deduction.

In many cases, you can also set aside tax-advantaged dollars for employees to buy coverage on their own. Qualifying small businesses can fund special health reimbursement accounts for employees that are used to purchase individual or family health insurance. Meanwhile, employees’ own contributions toward their monthly premiums can often be deducted from their payroll on a pre-tax basis. Some states have additional rules and restrictions.

HSA and HRA Tax Advantages

Similarly to health insurance premiums, Health Savings Account (HSA) contributions are not subject to Social Security, Medicare or federal income taxes. Earnings in an HSA are generally tax-exempt, and contributions can be excluded from an employee's income.

Contributions to employee HSAs are also deductible business expenses, if the money is used to pay for qualified medical expenses. So, if HSAs are part of your group health insurance plan, contributions from both your business and your employees are typically tax deductible up to annual limits.

The annual limit on HSA contributions depends on your type of health plan (e.g. High Deductible Health Plan), your age and your eligibility.

These tax advantages can be used in several ways. For example, employees can make pre-tax contributions to HSAs or to premiums for group health insurance.

Health Reimbursement Arrangements (HRA) are tax-advantaged, employer-funded healthcare accounts that are tax-deductible for your business, and Federal Insurance Contributions Act payroll taxes do not apply. For employees, HRA reimbursements are completely tax-free and excluded from their gross income.

SHOP and the Small Business Health Care Tax Credit

Small businesses also have access to provisions under the ACA that include the ability to purchase health insurance through the Small Business Health Options Program (SHOP) and access to the Small Business Health Care Tax Credit.

For information about state-based SHOPs participating in the insurance-buying process, see the Centers for Medicare & Medicaid Services FAQs about flexibilities for state-based SHOP direct enrollment.

Small business healthcare tax credits are widely available for small employers that provide employees with affordable health insurance coverage. To be eligible for the Small Business Health Care Tax Credit, companies must:

• Have fewer than 25 full-time equivalent employees and pay average wages under $53,000 per year.
• Offer a qualified group health insurance policy through the SHOP Marketplace.

• Pay at least 50% of the healthcare plan’s premium cost for each employee.

Qualifying employers may receive up to 50% of the contribution made toward employee premium costs as a credit. Businesses do not need to offer coverage to part-time employees in order to be eligible, but these employees may count toward full-time equivalent employee totals.

The tax credit is available to eligible employers for two consecutive years, with a maximum of:

• 50% of premiums paid for small business employers
• 35% of premiums paid for small tax-exempt employers

The tax break for your business works on a sliding scale, with larger credits for smaller employers.

For calculating the healthcare tax credit, one full-time equivalent employee equals 2,080 hours per year, according to the IRS. This differs from other ACA provisions that count 30 hours per week as full-time employment.

As an added bonus, even if your business does not owe taxes in a particular year, you can carry the credit back or forward to other tax years. Plus, the payment for health insurance premiums would exceed the total tax credit, meaning eligible small businesses could still claim a business expense deduction for the remainder of premium costs. That would lead to both a credit and a deduction for employee premium payments for the year.

Note: A self-employed individual can deduct many healthcare-related insurance premiums for themself, a spouse and dependents if they are not eligible to get insurance through an employer or a spouse's employer. The policy can use the name of the individual or the name of the business.

Smart businesses have good insurance and benefits. The best way to find good insurance and benefits is through a broker, consultant, or advisor who knows what you need and can get you the best tax advantage solutions. Especially with HSAs and HRAs.

Always check current tax rules and your specific situation with both your broker and your CPA.  

But, how do you know who to hire? With seemingly endless options, you feel under pressure to choose the right one. We believe that transparency, information, and choice leads to better hiring decisions.

It's why we created Mployer Advisor, a free broker marketplace that allows employers to compare brokers, consultants, and advisors in one place.

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Looking for more exclusive content? Check out what’s trending on the Mployer Advisor blog, and learn more about small business health insurance costs here.

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Property and casualty insurance policies help protect your business against damage, financial losses, legal claims, and covered perils. But finding the best coverage means paying a broker or advisor, and many companies wonder how property and casualty insurance agents make commission.

A property and casualty insurance agent makes commission when they purchase or renew insurance on your behalf.

Most standard business insurance policies have property coverage and casualty insurance, which includes general liability coverage and business interruption coverage. Agents and brokers finding such coverage for you earn commissions at the time a sale takes place or upon being assigned your broker of record.

In this post, we discuss the importance of property and casualty insurance, along with how a property and casualty agent makes commission.

How a Property and Casualty Agent Earns Commission

Insurance types in the property and casualty specialty include business liability, commercial automobile, flood, workers compensation, and other coverages. The cost of these business insurance policies depends on the type of business, number of employees, deductibles, and coverage limits.

Regardless of the price, property and casualty insurance agents typically are compensated through a commission based on a percentage of the policy premium.

In most cases, commissions are paid by the insurance company that the employer chooses. It is usually a percentage of the premium for the policy, and may or may not be built into the retention component of the premium cost. This compensation may include base commissions and supplemental (or contingent) commissions.

Property and casualty insurance agents typically earn between 7% and 20% commission on each policy they sell. The amount varies depending on factors including the type of insurance product, risk classification, whether the policy is new or a renewal, and services provided to your company. Commissions for renewing policies are typically less than the initial commission paid for new business. This renewal may include a persistency percentage based on all of the policies of the broker’s different clients that are in-force with a specific insurance carrier.

Some brokers are paid solely through commissions for policy purchases and renewals, and some include other fees. Sometimes a fee is charged as they take on consultant (or advisor) roles. Some states have restrictions on these non-commission payments.

As agents and brokers take on more advisory responsibilities, fee-based compensation has become a more common payment method. Usually called a “fee for service agreement,” these fees may be paid by insurance companies or may be directly billed to the client.

As your business grows and changes, you should expect your insurance broker to provide decision support. To earn their payment, brokers and consultants should be involved in your plan several times per year, helping make decisions that complement your overall business objectives.

To avoid unexpected costs, you should know the services and fees upfront, examine your agent or broker’s relationship with insurers, and understand the difference between insurance brokers and insurance agents.

When evaluating insurance brokers, be sure to explore online ratings and benchmarking studies that show who is in your market.

Find a property & casualty insurance broker near you.

Why Is Property Insurance Important to a Business?

Property insurance covers financial losses resulting from damage to your business' physical assets, such as buildings or furniture. It also helps replace other property that is essential for your operations, including machinery or computers.

Depending on the specific limits of your policy, different perils may be covered. Covered perils can include problems such as theft, storms, rioting/looting and equipment malfunctions.

For example, if your business property is damaged or lost by various common incidents, such as fire or theft, property insurance compensates some or all of the related expenses. This extends from your company’s buildings or structures to personal property like office furnishings, materials, inventory and machinery.

Property insurance is important to your business because it protects assets including (but not limited to):

• Buildings owned by your business
• Permanently installed equipment on your property
• Contents within your building, including inventory
• Outdoor property that is located on the premises
• Finished and unfinished goods, if you are a manufacturer
• Machinery that suffers a breakdown, such as boilers, refrigerators or HVAC systems

If you have special property, equipment or goods that would be expensive to replace, do not assume that it is covered by your insurance policy. Speak with your agent or broker to make sure you have the coverage you need before disaster strikes.

Should Companies Buy Casualty Insurance?

Commercial casualty insurance is a broadly used insurance category that mostly comprises liability coverages. It refers to the liability-related pieces of property and casualty insurance. Casualty insurance covers damages and settlements your business might have to pay because of an incident related to your company or property that injured a third party.

Most, if not all, companies should purchase casualty insurance along with property insurance. For this reason, they are often bundled together into a business owner’s policy (BOP) or other umbrella policy. The specific coverages most appropriate for your company depend on how you operate, inherent risks in your industry, and what your employees do day to day.

Here are the most commonly purchased types of commercial casualty insurance:

• General liability insurance: This casualty insurance protects businesses from claims or lawsuits by customers and other third parties for property damage, bodily injury or personal and advertising injury. Personal and advertising injury includes damage to a person’s or organization’s reputation due to false advertising, slander or libel.
• Customers may claim your business has harmed them due to defective products, service errors or employee negligence, among other sources. General liability insurance compensates you for these types of claims and other legal defense costs, if you are found liable. It also typically covers medical bills for people injured by your company or on your commercial property.
• Workers' compensation insurance: This coverage is mandatory for employers in most U.S. states. It pays the required benefits to employees who get injured on the job, including compensation for medical bills and payments for a portion of lost wages. Depending on the states your business operates in, employers must have workers’ compensation insurance when there are more than three to five employees.
• Commercial auto insurance: This covers potential liability and damage related to your commercial vehicles, such as trucks and vans. If your company’s vehicles are damaged or destroyed, commercial auto insurance coverage covers costs for most of the damages.

There are other types of exposures and coverage solutions. Using an independent agent or broker is one of the best ways to make informed choices about property and casualty insurance. You will not have to spend time to be an expert on each coverage type and insurance carrier, because they can make it easy to understand your options.

A good property and casualty agent will work with you to research coverage, conditions and prices, and can recommend policies that best fit your company’s needs. Working with a professional will lower your opportunity costs and provide you opportunity to run your business.

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