Reports show that small businesses that purchase health insurance through a broker or agent get a better price on their insurance, understand their coverage better, and are happier with their coverage in the long run. And as the landscape of employee health benefits changes with health care reform, health insurance brokers are playing an increasingly important role.
So, how does a small business go about hiring a health insurance agent or broker? Here are ten tips.
10 tips on hiring a health insurance professional
Ask friends or peers for a referral.
Ask the health insurance professional to provide referrals from companies similar to yours in size and scope.
Check references, as well as licenses and registrations.
Understand the difference between a broker and an agent (see FAQ below).
Check the agent or broker's disciplinary record by calling your state's insurance commissioner's consumer hotline.
Ask questions to understand what services they offer, what support they'll provide, and what type of policies or benefits they sell. Services vary from one health insurance professional to another.
Ask about their areas of specialty or expertise. What percentage of their business is with small groups? Do they offer defined contribution health plans? What insurance companies do they represent?
Ask about how renewals are handled.
Ask about their business model. How are they paid for assisting you? Do they receive commissions from the insurance company, or is there a flat fee? If a fee, how is it structured?
- Do they have a solid grasp on health reform, especially the impact on small businesses?
FAQ - What's the difference between a health insurance broker and an agent?
As you evaluate a health insurance professional, you will hear two terms -- health insurance broker and health insurance agent. Here’s a rundown of the two types of insurance sellers.
Health insurance brokers
Health insurance brokers are independent and sell for multiple companies. Brokers can typically provide more options and a broader view of the marketplace. Brokers will work with you to evaluate the major insurance carriers in your area on plan designs and costs. Brokers are usually paid on commission by the insurance companies. But, some brokers instead charge a flat fee from an employer, such as a payment based on the number of employees and months covered.
Health insurance agents ("Captive Agents")
Health insurance agents, also called captive agents, typically sell only one product, or multiple products from one insurance company. They usually have a close relationship with the insurance company they represent, which can give them more leverage to make plan changes. Their offerings may cost less. The insurers typically pay agents, so the business isn’t charged for their services. If you decide to work with an agent, talk to more than one to find out what different carriers offer.
Consider alternative health benefits
Traditional group health insurance plans don't work for all organizations. If you want a flexible, affordable alternative, consider a health reimbursement arrangement (HRA).
An HRA is an IRS-approved, employer-funded personalized benefit that allows employers to reimburse their employees tax-free for qualifying medical expenses. Depending on the type of HRA you offer, this can include individual health insurance premiums.