Selecting the right health insurance broker is crucial to an organization’s overall strategy for managing employee benefits. This decision is even more critical when a company has decided to leave a PEO and now seeks direct representation within the health insurance carrier marketplace. Finding the right expert to represent your company is more difficult than normal because the consultant must fully understand the underwriting implications imposed by the carriers. Coming from a PEO, the employer bears no loss ratio or any claims history from the prior benefit plan.
This creates an unknown or risky scenario for the insurance underwriter. This broker or consultant should know how to negotiate around this by presenting the most favorable explanation as to why the employer has been insured through a co-employment arrangement.
Use these 10 questions as a basis for making an educated broker selection when coming out of a PEO, or anytime you think you might want to change brokers or challenge your current broker’s capabilities.
- Does your firm provide access to virtually all insurance carrier and administration markets?
- What value added services do you offer beyond your firm’s internal expertise? Examples would be national affiliations, ERISA Attorney, Medical Director, and Pharmacy Consultant.
- What type of customized strategic planning services and methods for controlling healthcare costs do you offer your clients?
- Are your services delivered through a team of specialized experts or one main contact?
- What type of technology resources do you utilize to manage benefits administration?
- How are you compensated, and will you offer full disclosure of commissions earned? Is this a percentage of the insurance premium or a flat fee? Is this negotiable?
- What type of actuarial or data analysis techniques do you use to manage and predict plan costs?
- How do you ensure that your clients are kept in compliance, and what resources are available to your clients directly? An example would be filing of the form 5500.
- Do you provide ongoing employee support for benefit related issues/questions beyond enrollment?
- What type of custom communication materials are made available to your clients’ employees?
These questions are a basis for matching the firm’s expertise and approach to the goals that your organization has for managing healthcare. Even if you only have 100 employees, you are large enough to demand top shelf expertise and guidance from this strategic business relationship. There are far too many brokers that do the minimum required work for their clients and get paid well for doing it. Without knowing the right questions to ask, you may be leaving valuable dollars on the table. Additionally, you and your employees may be paying higher premiums because of a poorly managed strategy.
Value added services allow a brokerage firm to differentiate from their competitors and create the opportunity for their clients to maximize their total healthcare spend. Simply having a personal or long term “relationship” with a broker is no longer enough. Employers must view this relationship as a strategic business partner.