This is Part 1 in a two-part series about what employers should expect from their insurance brokers. Part 2 in the series will be forthcoming soon.
Setting The Stage
The world of health care finance is changing and the role of the health insurance broker is changing just as rapidly. The role of a trusted advisor is more important than ever. Health benefits for any size employer demand a benefits professional who has the client's best interests at heart. Employers must explore current benefits offerings and demand a package best suited to their needs.
Voluntary benefits, self funding, and Consumer Directed Health Care are just a few of the many options every employer must discuss with their broker. Many employers are also demanding that their brokers account for their income.
The days where brokers were paid a commission by the carrier and counted on a regular double digit raise simply by telling the employer to re-enroll are gone. Some carriers are changing their compensation model. Instead of paying a percentage commission they are paying per head, also known as a capitation model. This model eliminates the automatic pay raise brokers have been experiencing and forces brokers to explore other options to replace lost revenue.
Employers should insist on a written agreement outlining the broker's commissions and the services they will receive. A good broker will help an employer design a plan, market the plan to carriers, and analyze the costs and benefits of suitable plans. Beyond that, some brokers may handle open enrollment, resolve billing and claim issues, and help communicate with employees, but it's essential to clarify such expectations up front.
If your company is self-insured or experienced-rated, retain a competitive broker group to periodically conduct an independent market pricing comparison. You will pay a consulting fee for such services, but the initiative may result in significant savings.
Discussions regarding containing health care costs have traditionally focused on educating and influencing the employee consumer of health insurance. But now, as soaring costs and growing complexity have become the norm, employers too need to educate themselves in order to understand how brokers are compensated and how they can reap the most value from the employer-broker relationship.
Technology As Differentiator
Just as the Internet has empowered consumers, so has it empowered health insurance brokers. While once the task of acting as conduit between insurance company and policyholder required long administrative hours, computers now allow broker and insurance company to instantly transfer information.
Still, time saved by computer must be made up by competing for a limited and educated client base. The new technology has in part driven a trend towards specialization: brokers are marketing themselves as specialists in a given industry. One might be the specialist in non-profit health insurance while another may specialize in the travel industry. This allows brokers to be aware not just of policy options but also of the typical wants, needs and budgets of a given industry.
What directions technology will propel the industry will be revealed only with time. One thing that remains clear is that Americans do not want to worry about their health coverage and will look to experts for help securing the best service at the right price.
Every broker has the best service and every broker offers the best products, just ask them. What differentiates a broker is their technology. Not only the technology a broker uses in their office but more importantly the technology the broker provides to the employer groups. Most brokers are very reactionary. They provide technology to their clients only when the client demands it. All parties — employers, employees, Third Party Administrators, carriers, and brokers — must utilize technology tools.
Benefits administration software, COBRA administration tools, HRIS, and consolidated billing services are just a few of of the technology tools used by brokers and their clients. The days of brokers providing quotes and enrollments are over.
In the next article in this series, we will explore in more detail how top brokers are using these technologies to run their business.
