In case you are a small employer looking to use a broker to help you with the entire process of choosing your employees’ health insurance alternatives, you may be questioning what the broker must be paid. Here are a couple of questions you must consider:
1. Will my business have to pay extra costs surpassing the health insurance premium rates in order to pay for the services rendered by the broker?
2. Will a bill be sent to my business each month by the broker, apart from the bill issued by the health insurance company?
3. Will I be driven towards a particular health plan or insurer as my broker is paid more by that specific insurer?
While the questions are relevant, the answer is definitely NO.
Health insurance companies pay commissions to health insurance brokers. At no direct cost, brokers offer you various quotes and information regarding different plans, as well as enrollment assistance. The brokers’ commissions are paid directly from the monthly premium paid for health insurance. According to the Affordable Care Act, insurance companies must spend a minimum of 80 percent of the money that they obtain from health insurance premiums on costs pertaining to health care. Rest of the 20 percent can be dedicated towards administrative expenses, marketing, and other miscellaneous costs, such as broker commissions.
The majority of insurers tend to pay their brokers a predetermined percentage of the paid premium. But a few do opt for a flat fee per policyholder. For instance, a broker may be paid $15 by an insurer for each new enrollee and for every renewal, $10.
For brokers, retention is crucial. In case your rapport with your broker is great, and you do not enjoy the plan chosen for your employees, you need not find a new broker. That is because health insurance brokers are paid each month on the basis of the number of people enrolled in a specific plan. They are not paid a lump sum when the plan year begins. In case you choose to switch plans, brokers will still receive payments. But in case you decide to opt for another broker with your switch to a new plan, the commission will no longer be directed towards your old broker.
Across the board, the amount of commissions paid to brokers is essentially consistent. The state regulates the expense of health insurance premiums. Since brokers typically receive a percentage of the premium price, there is no way for the broker to raise the premium’s cost for earning more commission. Although brokers do benefit from enrolling your employees in a particular plan, it is ensured by the commission structure that there is no bias towards just one plan. Each employee enrolling in a specific plan increases the commission of a broker. Typically, new policies result in higher rates for brokers, while renewals result in a lower one.
When you work with a health insurance broker such as SimplyInsured, you can acquire information regarding health insurance plans that cater to your business needs and that of your employees without the addition of another line item to the budget. Essentially, health insurance brokers ensure that companies need not work on research or deal with understanding the health insurance industry by recommending optimal plans based on your needs.