Even before the birth of Obamacare, managingwas becoming a more complex process. You probably hire a broker to sort through the best health plans, but some brokers do little more each year than quote the same insurers with higher costs.
Benefits brokers typically charge commissions of anywhere from 3% to 6%. But it’s not wise to choose a broker based on commission rates alone; good and bad service comes at all points in that range. Here are some issues to consider when choosing the right broker:
Think of benefits brokers as consultants, and choose one with that same care you would put into selecting an accounting or law firm. Tip: Ask for references from companies inside and outside your industry.
Require benchmark data. Brokers should provide regular benchmark reports that compare the cost of your organization’s benefits with those offered by other companies in the same industry and region by size, category and other characteristics. Some brokers provide benchmark data that compare only their clients to each other.
Realize that big isn’t always better. Large brokers often claim they can get the best rates. But all brokers have access to the same rate information.
3 questions to ask brokers …
- Do you have special deals with insurers? Some brokers have exclusive arrangements to represent certain insurers for some types of coverage.
- What’s the ratio of account service staff to client organizations? There is no standard industry ratio, but you’re likely to get better service from firms that don’t have the highest number of clients per individual broker. You also may pay a higher commission.
- What’s the turnover rate among clients? Do clients move to other firms after a year or two to seek more options at lower costs? And how (and how often) do you update clients on the trends in benefits and changes in laws?
3 questions to ask yourself …
- Does the broker ask questions to understand the relationship between your organization’s benefits and its strategic goals?
- Is the broker trying to sell you specific services, or is he or she selling the role of advocate or consultant for your organization?
- Will the broker work for your organization to get the best deal possible, or work for the insurance company to earn a commission?