When you hear the word “broker,” what comes to mind? Insurance? Real estate? Brokers are typically people who have access to several options (in whatever their specialty is) and can help you narrow down your choices. Employee benefits brokers are exactly that: people who have access to (and information about) various employee benefit options who can help you narrow down your offerings by providing their input and expertise on the matter.
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It’s important to note, however, that not all employee benefits brokers are the same. Some may work for one organization, such as a large health insurance provider, and therefore steer you only through choices from that provider. Others may not be tied to only one provider but may only specialize in one type of benefit. Still others may have a larger base of benefit options to consider but may or may not have as much depth of knowledge across all of the choices. There are a lot of things to consider.
What Can an Employee Benefits Broker Do?
When selecting an employee benefits broker, be sure to know which of these topics (below) are most important to you, and confirm that the broker you select can assist with those specific concerns. Not all brokers will perform every item on the list.
Here are some of the things an employee benefits broker may be able to provide to an employer:
- Information and assistance in choosing various forms of insurance, including health, life, disability, dental, vision, and more. Note that not all brokers offer the full range of insurance options, but a large majority of benefits brokers specialize in insurance in some capacity.
- Compliance information, helping the employer to ensure it stays compliant with the Affordable Care Act (ACA), the Employee Retirement Income Security Act (ERISA), and any other regulations that are relevant for the benefits on offer.
- Advice on how to minimize total costs, such as how to reduce total premiums.
- Assistance with employee communications related to benefit enrollment.
- Contract review and negotiation (leverage) with the benefit providers to get a good deal. They may be able to create a customized insurance package for your organization.
- Assistance in resolving problems. A broker may be able to act as a go-between for the employer to help resolve any problems with claims or administration of the benefits.
- Analysis of your existing benefits and claims to provide advice on changes and potential cost savings.
- Advice on changes to benefit packages based on your employee demographics, as well as analysis of previous utilization rates.
- Direct assistance to employees who have benefit, coverage, or claims questions or need help with claims.
- Education for employees about their options during open enrollment.
Remember, not all brokers provide all of the above services. It pays to ask in advance which of these items will be provided. The more services a broker provides, the greater he or she assists the organization and the employees. But there are also costs to consider.
Once you know what functions you’d like from an employee benefits broker, that’s not the end of the story. Here are some other considerations:
- Any broker who is providing insurance will likely have to be licensed to provide this. Consider whether this individual will need licenses across multiple states to help serve your business or whether you may need multiple brokers who are licensed in different geographic areas. If you do, this may be solved by utilizing a firm with expertise across more than one location.
- While some people may use the terms interchangeably, an employee benefits broker is not necessarily the same thing as an employee benefits consultant. Some would argue that an employee benefits consultant goes beyond what a broker does by providing even more in-depth consulting and decision-making assistance to the employer and the employees. A benefits consultant may be more likely to be able to assist with multiple types of benefits beyond just insurance. Consider which option you need. Note that fee structures may also differ for consultants versus brokers.
- Brokers may work for or have contracts with specific insurers. The employer should ask what carriers the broker evaluates before making recommendations. It’s not necessarily a problem if the broker works with a specific insurer—it may mean you get greater discounts. But know what you’re getting and what trade-offs you’re making.
- Brokers have fees, of course. These fees are typically bundled into the coverage provided. Ask about this up front and whether there are any additional fees. Some brokers instead operate on a flat fee based on your specific needs.
What has your experience been using employee benefits brokers?