Although many people tend to use the terms “health insurance broker” and “health insurance agent” interchangeably, a true health insurance broker is supposed to represent the side of the policyholder or employer, while the health insurance agent is supposed to represent the interests of the insurance provider. Because of the process whereby the majority of us purchase our health insurance plans, we sometimes don’t even use a broker at all.
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If you buy your health insurance through your employer, you likely only talk to the company’s administrator of the plan, whether it’s an employee in the Human Resources department or a full-time benefits administrator. However, that person probably uses the services of an insurance broker, unless they work directly with the agent from the company’s insurance provider. Using an insurance broker will help your employer get the best deal possible on the group’s health insurance policy and options.
If, on the other hand, you purchase your health insurance independently, you may work with an insurance broker to represent your interests in the policy comparison process. You may also simply work directly with an agent with a specific insurance company, also called a captive agent. The difference between the two is the flexibility and availability of choosing from several different plans that fit your needs across a range of insurance providers or from the portfolio of just one insurance company.
Who pays a health insurance broker, the policyholder, or the insurance company?
An extremely fuzzy line separates an insurance broker from an independent insurance agent. Depending upon whom you ask, the terms are virtually interchangeable. Likewise, the issue of who pays a health insurance broker is equally fuzzy.
More often than not, as The Wall Street Journal reported in “How to Hire a Health-Insurance Broker or Agent”, the broker is paid a commission from the insurance company. The broker represents multiple health insurance companies and is paid by the one whose policy he actually sells.
In some instances, the employer pays the broker a flat fee. This fee is usually based on the number of employees involved in the health plan, as well as the number of months of coverage.
How do I know whether to pick a particular broker?
A health insurance broker may also be a financial services or benefits broker who doesn’t just specialize in health insurance but, instead, sells a host of financial vehicles. That’s fine if you’re looking for an expansive health and life insurance portfolio and benefits package, for you employees. If, however, you’re just looking for health insurance coverage that fits your company’s needs, then you’ll want to make sure that the broker you pick knows what they need to know about health insurance.
The Wall Street Journal’s Business Link recommends that you check to see if the broker will be dedicated to your company’s account or if, instead, the brokerage simply shuffles you around to several different brokers depending on whose available when you call. Your best bet is really to find somebody that will be with your account for a long time, so that they know your needs, especially in this economy. This will enable a dedicated broker to also know to recommend new insurance plans that come on the market or options that give more coverage as your needs change.
You should also do your research before deciding on a particular broker. Ask for referrals and check them. Call or check online with the local Better Business Bureau to see if the broker’s business has any customer complaints filed against it. You can also call up your state’s Insurance Commissioner’s office to check on the broker’s credentials and licensing, and to see if they’ve had any complaints or lawsuits filed on the broker with their office.
Do I need to purchase my health insurance through a broker?
If you’re purchasing individual health insurance, there’s really no need to go through an insurance broker. However, if you’re responsible for choosing the health insurance plan for your company, your best bet is to use the services of a broker. The broker should represent your best interests in finding just the right health insurance plan offering the coverage requirements for which you ask.
Another advantage of using a broker is their ability to also help your company with other aspects of its benefits package.
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