Why change your Broker of Record for Your Company’s Group Medical, Dental and Vision Insurance Plans

We often get calls from disgruntled business owners and HR people who are upset with their current employee-benefits broker and are looking for an alternative.

There are many reasons you may want to change your company’s “Broker of Record” (the technical term for changing your agent) for group medical, dental, and vision insurance for many reasons.  We’ve described some of the reasons below.  Here are some of the added-value services that Benefits Cafe offers.

It is very easy to change your broker for medical, dental, vision and other employer-sponsored medical insurance.  You merely write a letter on company letterhead addressed to the insurance company, reference your plan number and say that you want to change agents.  Benefits Cafe will prepare the draft letter for you, if you want us to become your agent.  Just give us a call at (800)746-0045.

1. Cost Savings: Savings may come in different ways, depending on the number of employees you have enrolled in your company’s insurance plans.
   • In the very large group market (1,000 or more employees in California) a new broker may have access to different plans or negotiate better rates with insurance carriers, potentially reducing costs for your company.
   • In the mid-market (100-1,000 employees) the rates and benefits are standardized but self-insurance or partial self-insurance may be an option, and some brokers are more familiar with these arrangements. Also, some agents charge a higher commission than others and that could result in a savings.  Depending on the monthly premium involved at 4-5% commission is standard.
   • In the California small group market (1-100 employees) the rates and benefits are fixed and based on the age of each enrollee and your business’ location.  The commission that brokers receive in the small group market is fixed by the insurance company, so you won’t pay any less or more for different agents.  The rates and benefits are identical for all agents, only difference is market knowledge and level of service.  It may be that a knowledgeable agent can find plans that are less expensive and fit well with your employees.
2. Market Knowledge: Not all agents stay up to date on changes in the marketplace. Agents or brokers who follow the market closely are better able to match your company’s needs with the products that are available.  If your employees are highly trained and highly compensated, then you will likely have rich benefits with full network PPO plans.  These employees can find other employment with companies that can offer rich benefits.  Conversely, low-wage employees in unskilled fields may be happy with any sort of benefits, even very low benefits.  It’s the nature of the world.  Find an agent who can give you helpful advice.An agent or broker who understands your business and knows the insurance market can match your needs with the appropriate insurance products.  You, the employer, are paying your agent for market knowledge and you should work with someone who is on top of what is happening now.One problem with using a payroll company as your insurance agent is that they frequently have inexperienced people offering advice and those people often change frequently.  You pay the same rate for a knowledgeable agent as for an inexperienced one, so select wisely.
3. Better Service: Some brokers work diligently to get your business, but they fail to work hard to keep your business.  Setting up the correct plan for your company is important but solving the inevitable problems that arise is just as important, if not more so.
   • Medical insurance is complicated, and many things can, and do, go wrong, including:
     • bills from doctors, hospitals, labs, pharmacies for different procedures often get coded incorrectly and the member is asked to over pay for services, and
     • some providers are in-network and others are out-of-network and sometimes the insurance company mistakes an in-network doctor for an out-of-network doctor and demands the member pay more for services.

   Mistakes by the insurance company, or your doctor or hospital can end up costing your employees and their family members a lot of money. Your broker should be able to solve problems. If your current broker doesn’t respond promptly to requests for assistance to HR people or to employees, then it may be time to find a broker who does.

   • You may want to change to a smaller broker so that you can get personalized service, which includes:
     • easy access by phone or email;
     • quick response;
     • actually solving problems; and
     • following up when insurance companies say that they have solved a problem.
4. Compliance and Expertise: Government requirements and insurance regulations and offerings change over time. An experienced broker may have more expertise and help you comply with new laws regulations.However, beware of brokers who claim the sky is falling and you’re one step away from a regulatory nightmare. Sadly, some brokers use the threat of an imminent Department of Labor audit, or an IRS crack-down to lure unsuspecting employers away from their current broker or agent.  They’ll say that these audits are on the rise and your current agent has left you vulnerable.  This is frequently not the case.We, Benefits Cafe, will prepare the compliance and disclosure documents an employer needs to give employees.  We will also prepare a Section 125 Premium Only Plan for our clients and a Wrap Summary Plan Document (SPD) which keeps you in compliance with ERISA, a federal law that governs group insurance plans.  When we do an online enrollment, employees acknowledge that they have received these required notices.  This creates a paper trail that will help in the event that you ever were to be audited.Benefits Cafe also helps clients who must comply with Federal COBRA laws and California CalCOBRA.
5. Innovative Technological Solutions: Technology is changing the world and that includes group employee benefits.  An online benefits administration system is now common in the small group to large group markets.  Benefits Cafe sets up and supports an online benefits enrollment system,  at no cost to our clients.If you must print applications, complete and sign the application, then scan it and email it back to your agent, and you have more than a few employees enrolled in your plans, then you should probably find another broker who has adopted technology to eliminate these burdensome tasks.

These are a few things to think about when you are searching for a new broker.  Please consider Benefits Cafe as an option to be your broker – agent.  We have been in business since 1970, and we know the market well and we know how to service our clients.  Just give us a call (800) 746-0045.