Health Insurance Broker

Mployer Advisor Can Help You Find,
Evaluate and Choose the Right Health Insurance Broker

Having the right health insurance broker for your business can save you money and help customize your company’s benefit design to retain top talent and recruit new employees. Explore FAQs, resources and information to help you find the right health insurance broker for your company.

What is a
Health Insurance Broker?

Health insurance brokers are licensed professionals who contract with insurance companies to offer you competitive rates for your health insurance. Brokers may also offer other types of insurance like disability insurance, life insurance, and voluntary insurance products like accidental death and dismemberment, accident and critical care insurance.

Health insurance brokers can offer either business health insurance or individual health plans. Below, we will focus on business health insurance brokers.

What is the Difference Between Health Insurance Brokers,
Insurance Agents and Insurance Consultants?

Agents, generally speaking, sell insurance for one specific company, like State Farm who offers home and auto insurance to individuals. These are called “captive” agents, meaning they are held captive and only sell for one specific insurance company. Agents are usually paid a percentage of the premium that the person, or employer, pays each month.

Brokers, on the other hand, sell insurance on behalf of multiple insurance companies. They work with businesses and others to identify which insurance plan best fits their needs.

For example, when working with a business, brokers may get quotes from 3-5 different insurance carriers, like United, Blue Cross, Cigna and Aetna. The health insurance broker then works with the employer to see which quotes best fit the employer’s needs, from both a price and product offering standpoint. Brokers are usually paid a percent of the premium the employer pays per month, as well as payments by the insurance carriers at the end of the year called “supplemental commissions.”

Consultants usually work with mid to large employers on a fee-based arrangement to help design their full benefit plan and pick the right insurance carrier. As opposed to brokers, consultants usually receive a fixed fee for their work instead of a percent of payments. For large employers, it doesn’t make sense to pay a percent of the premiums because for the most part once the plan is built for 1,000 employees, it’s the same plan, usually, that can be offered to 2,000 or 3,000, etc.

For additional information, read more about employer health insurance brokers vs. employee benefits advisors.

Do Small Businesses Need a
Health Insurance Broker?

Yes. No ifs, ands or buts. If you purchase your employee benefits directly online and not through a health insurance broker, you are likely getting a mark-up and have nobody there to support you if something goes wrong.

 

What are the advantages of working with an insurance broker?

 

  1. Likely lower cost

    Online health insurance providers will lure you in, make you enter all of your information and before you know it, you are at the end of a path with a number in front of you to accept. It might be easy, but you pay for it.
     

  2. Easy to use.

    Health insurance brokers are easy to use and, depending on your size and complexity, can provide you with quotes pretty quickly from multiple insurance companies.
     

  3. Expertise.

    Brokers can give you advice as to what would be best for your employees and needs depending on what industry you are in and what else you need.
     

  4. Advocacy.

    Brokers are there for you if anything goes wrong, which in healthcare it can often happen.
     

  5. Complete package.

    Your benefits package is likely comprised of multiple things, medical benefits being one of them, but depending on your industry and the makeup of the company, you may need other things. Your health insurance broker acts as your advisor to navigate you to the right people to support you, if and when it’s needed.

Learn more about health insurance for very small companies.

 

Do I Have to Pay a
Health Insurance Broker?

Yes, and no – not directly. You select your health insurance broker, then they work with you to get quotes from different insurance carriers. Depending on which insurance carrier and plan you select, the broker gets a small portion of what you pay to that insurance company each month. Their fee is baked into the insurance cost.

Are Health Insurance Broker
Fees Fixed?

For small employers, for the most part, yes. States have regulations that govern this. Usually there is a 50 employee minimum or 100 employee minimum depending on the state, and if you are under that number then the fee is a fixed percentage. But that does not include contingent commissions that insurance companies pay to brokers for meeting certain aggregate goals.

For large employers, no, not really. Two companies of the same size in the same industry with the same broker could be paying very different fees to that broker. It all depends on how the broker “prices” the business and what they get you, the employer, to agree to. One could be paying 8%, the other 3%.

Estimate the fees and commissions that would go to your health insurance broker with Mployer Advisor’s commission calculator.

5 Things to Look For in a
Health Insurance Broker

There are 5 main things employers should look for in a health insurance broker.

1

Do they have expertise in your company size?

Managing benefits for a company with 25 people is very different than managing a company with 250 people.

At 25 people, the person managing the process may be an HR person, but it could also be the CEO, CFO or COO depending on the staffing. You are not thinking about self-funding. Enrollment is very personal with each employee and you want to make sure the healthcare network fits your employees. Disability, life insurance and voluntary benefits are all important, but they may not be a priority or you may not have enough attention to focus on them while also running a company.

At 250 people, you likely have an HR department and a benefit manager to help you. You are considering self-funding. You may have stop-loss coverage, and you may consider carving out pharmacy spend as well as many more options. You also heavily research voluntary benefits, exploring who the best carriers are and other options.

Therefore, when it comes to insurance, employers have different priorities and considerations depending on their company size. When picking your health insurance broker, make sure you choose one that has expertise in companies of your size and your type of benefit issues.

2

Does the broker have expertise in your company’s industry?

Managing benefits for a construction company is much different than managing benefits for an IT company.

For a construction company, first off, your medical benefit costs are likely higher, along with your needs for short and long term disability products. Why? Because they are used more often than other industries. Having the wrong plan could result in excessive costs for you and your employees. You are also looking to attract and retain a very specific work force who may be more interested in certain offerings than others.

For an IT company, you likely have lower needs and costs for medical benefits due to the nature of the work. There may be other issues that arise or benefit types that are important to this specific audience, like voluntary benefits or life insurance.

This illustrates why it’s important to choose a health insurance broker with experience in your industry. A broker who is familiar with your industry understands your company’s needs. As a result, they can procure coverage options focused on the areas most valuable to you and your employees.

3

Do they have expertise in the insurance products you need?

Each health insurance broker has experience with various benefit types. Some just offer medical (health, dental and vision) and some offer short term disability, long term disability, life insurance and voluntary benefits.

Whether it’s performing surgery or selling you benefits, you want an expert to do the job. There are experts in each of these insurance products who know the various ins and outs. Experts know the big claims that may not be covered, common issues employers and or employees are likely to have and how to solve them.

Just as you don’t want a surgeon operating on you on their first day, you don’t want a health insurance broker with little experience.

4

Price & fee transparency – Are they open with the fees they receive?

Transparency from your health insurance broker is important. Compensation and alignment in the sector is not always clear, and that’s why you always want a health insurance broker who is proactive in sharing with you how they are compensated.

Usually, brokers are paid a commission which is generally a payment per month that is a small percentage of what your premium is. This can range from 2-10% for the most part, depending on the state, the employer size and the insurance product they sold to you. This should be shared with you up front.

The second piece is a little trickier. Health insurance brokers are also paid a “contingent commission” at year end based on various metrics like how many new employers they place with a specific insurance company, or total employees with a specific insurance company.

For example, imagine if it was $5 more per employee per month for you, the employer, to go with one insurance company over another, for your 200 employees. That’s $12,000 extra per year. But what if the health insurance broker were to receive a $10,000 bonus from that insurance company because you selected that insurance company? Incentives are not aligned. Therefore, make sure all fees are disclosed. How? Ask, ask, and ask again.

5

What do other customers say about them?

Just like every other purchase you make, customer reviews are valuable. It doesn’t matter if it’s a new set of pots and pans, a new car or a new insurance broker. Look for reviews.

Mployer Advisor has a significant amount of reviews already available to you from employers, but that shouldn’t be the only place you look. Ask the broker to speak with other customers of theirs in your size and/or industry.

In general, it’s like finding a doctor. You want one that specializes in what you need, and who has performed a high number of similar procedures to yours. Similar experience matters, transparency matters and customer feedback matters. It's all at your fingertips on Mployer Advisor. Don’t make a decision without verifying.

How Do I Find a
Health Insurance Broker?

To find a health insurance broker, search Mployer Advisor. That’s what we do. We make available a directory of insurance brokers, consultants and advisors, with ratings, areas of expertise and employer recommendations and reviews. It's just that easy. Search now for an insurance broker in your area with expertise in the products you need, or learn more about finding a new health insurance broker.

Do Health Insurance Brokers
Just Sell Health Insurance?

Some health insurance brokers just sell health insurance, while others are able to provide a number of products. For the most part, health insurance can and will cover health, dental and vision insurance.

Your health insurance broker may also offer short and long term disability, life insurance and other voluntary insurance products like critical care insurance, accidental death and dismemberment, accident insurance, cancer insurance and others. If they don’t, they may be able to refer you to somebody who does. However, make sure you understand any type of referral fees that are paid.

Who Are Some Prominent
Health Insurance Brokers?

Most health insurance brokerage names are not common to the general business person. Some of the large firms are Marsh & McLennan, Arthur J Gallagher, USI and Aon. Regional player examples are Cobbs Allen, Fisher Brown Bottrell, and there are smaller ones as well in your market.