Professional health insurance brokers provide the expertise that can be very helpful in finding the best plans for your business and guiding you toward the right choices. These individuals are licensed experts who:
- Know the market. They can discern the best products from the merely adequate.
- Know the law. They are versed in the state and federal regulations that can expose your business to serious liabilities.
- Know the industry. They have satisfied licensing requirements, which require them to keep up-to-date on the insurance market.
Brokers vs. Agents
When we say “broker,” we mean a professional who can direct you to products offered by a range of companies. This is in contrast to a health insurance agent, who works with only one company and promotes that company’s products. Technically, both of these types of professionals are licensed as insurance “agents,” but we distinguish between them based on common parlance. If you do not use a broker, you will likely work with an agent at each company you contact.
What Will the Broker Do?
Your broker will help you:
- Shop for the right plan(s) for you, and provide you with one or more premium quotes.
- Discuss alternatives with you so that you have a clear understanding of your plan choices.
- Implement the plan you select.
- Service the account, including solving problems with billing, eligibility and claims.
- Ease the burden on your time by doing the “legwork” for you.
- Get the most from your coverage after you’ve bought it.
- Assist with the renewal process.
Broker Commissions and Fees
Brokers earn a basic commission for their services, and sometimes charge extra fees as well. Commissions are typically based on a percentage of the annual premium and are included in the premium that you pay. In other words, a broker’s basic commission is built into the insurer’s rates, so everyone pays them whether they use a broker or not. Fees, on the other hand, may be charged for certain extra services. You’ll need to make sure you know what, if any, fees will be charged when working with a broker. Extra fees are generally paid directly to the broker.
Finding and Choosing a Broker
You can find an insurance professional in your community in a number of ways:
- Contact assocations that focus on health insurance or small business. Often they can direct you to brokers. Your state or local association of health underwriters or chamber of commerce are just two examples.
- Ask trusted advisors, such as your accountant or attorney.
- Check with other business owners about their experiences.
- Check for brokers online. We discuss online brokers below.
When making a decision on whether to use a certain broker, be sure to keep the following in mind:
- Ask about the dollar amount of any fees or commissions that you will be charged, and ask if any separate fees will be added to the premium by the agent/broker.
- Clarify the services that you will receive. For example, some will assist you with explaining the plan to your employees; others will not.
- Remember that an agent or broker becomes an extension of your staff. How well does this person work with your staff on a day-to-day basis?
- Discuss how the agent or broker will assist you during the year. Will your representative be your primary contact, or is another person responsible for servicing your plan?
See “Brokers and Agents” for referral sources.
Online Brokers
There are hundreds of broker-sponsored websites aimed at consumers shopping for health insurance. Broker sites fall into two categories: those sponsored by independent brokers whose primary interaction with clients is offline, and those operated by companies that specialize in selling insurance online. The two different types of sites have different strengths.
Independent broker sites may offer only limited online capabilities, but may provide more personalized service and greater administrative support throughout the year. Brokers dedicated to the online channel may offer broader online capabilities but less ongoing support for billing, eligibility and claims issues. These sites aim to have most consumer interactions occur online, but also offer centralized telephonic customer service to augment online services.
When shopping for insurance online, you should know that broker sites sometimes have trouble keeping benefit details up to date. Once you narrow your choices down to one or two health plans, be sure to confirm coverage details (what’s covered and what’s not) at the health plan’s own website.
See “Purchasing Insurance Online” for names and contact information.
Going It Alone
If you know the health plan that you want and you have some comfort level with the world of insurance and its often confounding terminology, you could work directly with an account manager or salesperson at the insurance company. Keep in mind that when you buy insurance this way:
- Some insurers will not sell direct.
- Initial premium quotes are usually “representative.” Actual rates are based on your business and employee population, so your premium rate can vary greatly from the initial quote. You won’t know your actual premium until you go through the application and underwriting processes. This is also true when you work with a broker, whether traditional or web-based.
- You will be responsible for handling all service issues, including:
- Initial enrollments.
- Annual enrollment periods.
- Problem resolution (billing, eligibility, claims, and so on).
It is possible to buy group insurance directly over the Internet. Here are some things to keep in mind when buying insurance online:
- Three types of websites provide information for consumers shopping for health insurance: broker sites, health plan sites and purchasing alliance sites.
- At broker sites, you have a variety of plans and insurers from which to choose.
- Not all transactions can be completed online. With some transactions or brokers, you must complete the transaction by mail or phone.