As a group health insurance consumer, you naturally look for an educated adviser to point you in the right direction for decisions regarding health care. As a result, you turn to the internet or the yellow pages to find yourself a qualified benefits broker. You find a benefits broker/consultant with all the right qualifications and a snazzy eye-popping, sophisticated website. What could go wrong?
In this discussion I hope to share some insight to health care consumers why brokers may be doing all they can to not help you. Let me back up by saying that the role of the benefits consultant/broker has changed dramatically since 1995. As a traditional broker, your job in 1995 was quite a bit different. You were working harder to land accounts and you were paid considerably less because the premiums were lower (before the super-inflation period of recent). Today it is quite common to have a fully insured premium renewal increase between 12-15%. As a result, employers are having to reduce their benefits to cut cost or implement a higher deductible to get to the premium level they were at before the renewal. This is no opportunity to reduce cost and avoid disgruntled employees.
There are a number of reasons why the brokers are not interested and will do whatever they can in order to get you to buy into the fully insured premiums with the lower deductibles.
1.) The brokers are paid commissions on the business they put with Blue Cross Blue Shield, or any other fully insured carrier (could be Harvard Pilgrim, Tufts, Aetna, Cigna, United Health Care). They are paid commission on a scale back basis starting at 3% and making its way back down throughout the policy year. The more premium they sell, the larger their commission portion is. By recommending higher deductibles, the premium reduces and they lose commission money.
2.) The brokers are paid "override" commissions on the business at the end of the year. This is where the majority of their money is made. They receive a closing year bonus on their block of business. They are offered two types of bonuses: contingency bonuses and persist-ency bonuses. Contingency bonuses are based on the amount of new business they have with Blue Cross Blue Shield. Each bonus amount is dependent on the individual broker's performance with Blue Cross Blue Shield. The second type of year end bonus is persist-ency bonus. This is for keeping their book of business with Blue Cross Blue Shield and renewing cases with the 12-15% increases. Therefore, the brokers are not motivated to sell employers the cheaper health insurance because they are penalized on their WHOLE block of business if they move cases to a different carrier or self-funded account. I repeat, the ENTIRE book of business they have with Blue Cross Blue Shield so naturally their selection of interest tends to fall with the fully insured carriers.
Brokers have become fat and happy. As a result there is a tarnish to even a title of "broker" and many brokers are swapping their titles to consultant or adviser.
As a result, I would encourage any employer to shop their quote with more than one broker. Let the brokers compete for producing the cheaper health care cost and bring competition back into the equation, true competition!
For more information on our company and our benefit specialists please visit our website.
We are dedicated to finding the affordable solution and keeping YOUR best interest ahead of ours. We value relationship and ethics and that is why our best interest is YOU.
In addition, many brokers will tell you that your company is too small to self fund or self insure. This may be the case; however, it is dependent on many factors besides size of your company such as age and nature of industry.
The brokers will tell you this to keep you fully insured and to keep you buying into the larger premiums, while keeping their pockets deep.
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