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10 Questions Employers should ask their Employee Benefits Broker

In the post-Healthcare Reform world, companies need more from their health insurance brokers than ever before.  If you broker only provides quotes when asked and handles reactionary customer service needs, you may be getting short changed.  Below are 10 questions you should ask your current employee benefits broker or any new broker you may be interviewing.  These questions will give you an idea of their capacity to meet the needs of a modern benefits program.

 

1) How many clients do you have?

Most people don’t think about this when they are talking to a broker.  Health insurance brokers can have up to 250 clients.  With that many clients, how can they possible spend much time with you and your employees.  And more importantly, how will they have time to help fix the inevitable problems that come up throughout the year. Ultimately, you have to ask yourself if you want to be a small fish in such a large ocean or if you would rather be a big fish in a small pond.

2) When will you start our health insurance renewal process?

Most brokers won’t start working on client renewals until 90 days out from their renewal date. The problem is that, with only 90 days, all you can talk about are plans, benefits, and quotes. With all the regulatory and compliance issues employers have to deal with today, 90 days won’t cut it. You need to be discussing your benefits throughout the year. A mid-year review 6 months out from renewal is the best way to make sure you don’t skip over any important detail of your benefits program. This far out from renewal, quotes aren’t yet available from carriers so it’s easy for everyone to focus on the other aspects of your benefits program, not just premiums and benefits.

3) How much commission will you receive from our policies?

In the large group market (over 100 employees), broker commissions are negotiated and must be agreed upon by the employer. However, in the small group market, commissions are built in to the premiums and rarely discussed.

While the commissions are fixed and non-negotiable, you still need to know what your broker is being paid so you can accurately determine what kind of return on investment they are providing your company. It’s very common to see groups where the broker makes well over $10,000 a year in commissions and only talks to the employer at renewal. These groups are handed off to a customer service rep after renewal, have no compliance game plan in place, have never planned for a Department of Labor Audit, and often times, are still paying more in premiums than they need to for their employee benefits package.

4) How often will you market our benefits?

If you get an answer other than every year, you need to fire your broker immediately. You should always be aware of where your current premiums are in comparison to the market. If for no other reason than your broker being able to use this information to negotiate with your current carrier. Often times, brokers will tell groups that shopping their benefits every year will cause carriers to rate them poorly. This is not the case. Changing carriers every year could have negative consequences on your underwriting but getting quotes has no impact at all. The idea that you should just take the renewal that your current carrier gives you and not worry about it is absurd.

5) How will you keep us updated on legislative and compliance changes?

With modern technology, it’s easier than ever to stay in touch with clients. Every broker should have some sort of monthly email to keep clients up to date on legislative changes. But getting these updates is not the only question you need to ask. Who is putting this information together and where is it coming from? Are they putting these newsletters together themselves or are they using a third party that has a full time team of ERISA attorneys working on these updates? A reliable source can make a significant difference in you being in compliance or out of compliance.

6) What kind of tools do you use to analyze our claims?

If you have more than 100 employees, carriers will give you fairly detailed claims data. How will your broker analyze this data? Many will simply analyze it themselves. And while this method can result in some basic understanding of what’s driving your claims, a more detailed analysis may be warranted to uncover specific areas that you need to address with employees and dependents.

For example, let’s assume a simple analysis reveals that your emergency room visits are high. A more detailed drill-down method will uncover more details about those visits. Perhaps most of these visits are occurring by employees on Saturdays. In this case, we may dig a little deeper and find that your time-off policy is too strict and your employees need time available to leave work to go to the doctor during the work day. If you need this kind of drill-down analysis, can your broker provide this kind of insight?

7) What kind of experience do you have with self-funded benefits?

With this question, I’m not suggesting you should have a self-funded plan in place. The point is that working with self-funded plans provides a much deeper understanding how health insurance and benefits work. A broker with knowledge and expertise in self-funding can use that knowledge on fully-insured plans (even for small groups) to help not only with your premium costs, but also risk management and compliance issues. A broker who has never worked on anything but fully-insured plans and has no expertise with self-funding is simply gathering data carriers provide and accepting it. A self-funding expert will have the capacity to ask more questions and catch the carriers if they are taking advantage of you.

8) Do you have any third parties you work with to help with compliance?

Today, many brokers are preparing 125 plan documents, Summary Plan Descriptions (SPDs), providing COBRA administration, and filing 1095 forms. Brokers are licensed and educated in insurance, not compliance. If your broker is writing your Summary Plan Document (SPD), what kind of services can they offer you in an audit situation. If they are filing your 1095 forms, do they have the capacity to help you when some of them inevitably come back with mismatched information?

A third party who specializes in compliance services will typically not only provide the service on the front end but also help with the back-end service issues. While you may have to spend a couple of thousand additional dollars on these services, it will be money well spent on risk management.

9) How will you help our employees and new hires understand our benefits and select the best plan for their families?

Most brokers will come in and make a presentation to your employees at renewal. But will they be available to talk to new hires that come on throughout the year? While employees may have a great understanding of benefits after an open enrollment meeting, they may not need to use the benefits for several months. At this point, they may need help understanding how they work again. How will your broker help your employees in these times? Do they have any communication tools where they can educate your employees throughout the year and help them understand how their use of benefits can impact their paychecks?

10) Do you have any clients I can call to get a feel for what working with you is like?

“We have great service!” Every broker says it. But, how can you know what it’s really like to work with them? A great broker should be able to provide you with a client or two you can call to hear about their experience working with them. Things to keep in mind are, “How big is this client compared to my business?”. If they refer you to a client that pays them $25,000 a year and they are only going to make $5,000 a year on your account, how do you know that they will give you the same level of service of someone paying them 500% more than you?

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