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How do health insurance brokers make money?

The lowdown...
  • Health insurance brokers get paid from the premiums sent to the insurer
  • Health insurance brokers get commissions based on the value of the premium
  • Health insurance brokers can earn fees for extra or specific services they perform
  • Health insurance broker commissions do not add to the costs of the insurance

Health insurance brokers play an important role in bringing coverage to individuals, families, small businesses, and small to large employee and dependents groups. They get paid from the total premiums involved in the group that they help arrange. They can also earn money from fees for negotiated services in addition to the commissions. Comparison shopping can help with the selection of a health insurance broker.

While many get the same commission, some offer valuable services beyond the basic functions. Consumers should consider the health insurance broker as part of their management team.

You can avoid broker fees and find health insurance online for free. Just enter your zip code above to get started!

What are health insurance brokers?

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Brokers are health insurance professionals that understand the products and systems that support them. They dedicate their efforts to earning commissions and fees by assisting businesses and persons when seeking insurance coverage for an individual, a family group, or other groups such as employees and their dependents.

Brokers work with many companies and usually handle a variety of types of insurance. They are different from insurance agents. Brokers can be individual professionals or large firms that handle large corporations and their employee retirement and insurance needs.

Agents versus Brokers

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Some people use the terms agent and insurance broker interchangeably. They do not mean the same nor do they describe the same roles in business. Agents have a narrow place in the business world; they usually do a lot of business with one provider. The idea of an agent is appropriate. They basically represent a single company. They can handle some or all of the products of the single company which may give them more versatility than brokers.

Working for a large multi-versed provider can give the agent a large number of products and markets in which to work. The broker is different; he or she works with a larger number of providers and their products than the agent. The brokers represent competitor insurance companies, and they may have to find the best offers among them for a given client.

Authorization to Represent

The trigger for the health insurance broker to initiate action on behalf of a client is the authorization. The broker does not work with a single carrier and may not have the same levels of access to products, personnel, and information. But the broker is not beholden to promote a single line of products; the ability to work the market on a client’s behalf is a major advantage of working with a broker. The broker can have a broad background or a narrow one depending on the range of his or her experience.

Brokers should have experience in the type of insurance that the consumer seeks. No one may have a complete portfolio of all types of insurance. However, it is important to know the particular field.

Brokers experienced in retirements may not be appropriate for a dynamic young group of employee-entrepreneurs.

Brokers Can Help

Health insurance brokers can help high-income individuals, families and every applicant that wishes to see the widest possible array of coverage possibilities. The broker can help customize the arrangements.

Some companies need support that matches international settings and time zones. Some customers may need translation services to account for language needs among the business locations. The more the broker knows about the client needs, the more likely he or she is to become a valuable member of an effective management team.

Brokers Can Do All or Part

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Health insurance brokers can perform all or part of the work involved in setting up a group plan. Using the Marketplace small business portal, they can do everything short of paying the premiums. The SHOP feature of the Obamacare Marketplace, consumers can work with any broker that they wish.

The Marketplace requires registration with their system and a professional understanding of the system and its requirements. Once engaged, the broker can perform may authorized functions. The consumer is free to replace the broker, and they can do this up to twice per year.

How do Brokers get Paid?

Insurers pay brokers and other intermediary parties They get paid from the sums paid by the customer as premiums. In the federal Marketplace, insurers must pay the same level of commissions for the Marketplace SHOP program that they pay for other group sales commissions. By registering and accepting a client authorization, the health insurance broker gets commission protection in the Marketplace, and the insurer processes the commission as part of the transaction.

Agents may have advantages in getting low prices from a particular insurer. That is clearly a benefit of handling one carrier as opposed to a wide variety. The client’s interests can be served by effective representation working the competitive desire of companies to compete and land the account.

Small Business SHOP Advantages

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Health insurance brokers that work with the Marketplace SHOP portal can open many useful opportunities to small businesses that are not required to provide health insurance coverage. They can show the way to tax credits for small employers that can protect profits in years in which the business earns well. The brokers can get access to a part of the market that may not have been available before.

The small business market of volunteer health insurance providers was fueled by the provision of tax credits by the Affordable Care Act.

Small business owners can protect their key employees and improve the financial strength of their companies at the same time. If they insure their employees and collect tax credits, they will have spent nothing on the insurance because it would all come off their tax bill as health insurance or business expenses.

Finding the Best Values

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Brokers ultimately make money by producing good outcomes for their clients. The customers consider the commissions and fees as funds well-spent when the health insurance options are affordable, feature-rich, and responsive to the needs of the group.

Brokers can use knowledge and experience to uncover the best values. The effort may be the most telling aspect of the representation. One may have to work the markets to find the best fit for the client’s situation.

  • Brokers can compare offerings from competitors.
  • Brokers can work the markets to get superior pricing.
  • Brokers can add customization to meet customers needs.

Broker Organizations

Brokers have business structures as well as solo practices. In broker organizations, it may be important to know whether one will deal with many company reps or with a single account manager responsible for the overall progress on the tasks. The form of the broker organization may be more or less comfortable for the task of making an effective health insurance team.

Reviews from People like You

Reviews and word of mouth are good sources of information on health insurance brokers Verified reviews have some compelling content when the clients express similar needs that one seeks to fill with affordable insurance. The idea of other business experiences may be a good way when one assesses broker firms.

Across the wide experience with thousands of customers and hundreds of broker employees, one can find answers to the nagging questions of experience and reliability.

The Economics Matter

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The costs of health insurance concern individuals and business owners alike. The plans seem to offer less while charging more. Many employers have begun to reduce plan coverage for providing employer resources for handling rising expenses and premiums.

Comparison shopping is the proven method for finding the best arrangements in health insurance. The experience and knowledge of the seasoned health insurance broker can add a dimension to the search based on knowledge of the insurers and the trends in the industry.

Meeting Individual Needs

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Insurance brokers can work with clients of all types and sizes. They can help an upper-income individual find qualified health coverage outside of the Marketplace; they can work with small to medium sized businesses that wish to add health benefits through employer financial arrangements in addition to group health policies. They can work inside the federal Marketplace with the Obamacare policies to help small groups and families. The below-listed items describe benefits of retaining broker assistance.

  • Upper-income buyers get little or no financial assistance from the Marketplace.
  • Many buyers have needs that private policies can address.
  • Buyers have an advantage when they can review offers from outside of the marketplace.

Brokers fill an Important Knowledge Gap

Starting in 2014, the health insurance brokers represented an advanced level of knowledge about insurance and the rollout of Obamacare. That knowledge advantage remains in the years since. It has grown in importance as costs and value come to the forefront of the individual and business search for health insurance costs controls. Brokers make money because they can provide needed assistance as customers navigate through the ever-changing area of health insurance.

Still There are First Timers

In the calendar year 2017 there are new firms applying for benefits and seeking to cover employees for the first time. Navigating the markets is particularly difficult in the midst of deep market changes. The assistance of seasoned and knowledgeable professionals is a substantial advantage.

Selecting a Broker or Broker Company

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One must again return to the idea that the broker is part of the management team. Like the accountant, attorney, and banker, they form the group that must get the task at hand accomplished with the best possible result. Before selecting a broker or firm, one should perform the due diligence on the candidates.

Find out if they have handled the type of business at hand and whether there were any significant client issues. There are second chances in the rules that permit switching brokers up to twice in a year. The loss of time, effort and momentum should be avoided by making an excellent choice from the beginning.

Health Insurance Brokers Find the Best Values

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Health insurance is a deeply confusing situation with many important trends that affect the markets in significant ways. The goal is to find health insurance at the best possible price. The task can require creativity and insight. Sometimes premiums are the best source of guidance, but at other times they could mislead the effort for costs control.

Comparison shopping for both the broker and the plans will yield the most favorable outcomes for the business and employees.

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