The health insurance plans a broker recommends may depend partly on how much the broker stands to earn, benefits consultant Lucinda Brophy said.
Brophy, founder of Tandem Benefit Partners in Medford, said insurer bonuses and other incentives can create conflicts between a broker’s compensation and an employer’s needs. She encourages business owners preparing to renew employee coverage to ask how their brokers are paid and whether those payments influence the options they present.
Beyond standard commissions, insurers may offer brokers travel rewards, bonuses and other financial incentives, Brophy said.
“When carriers pay more additional bonuses and incentives, those costs become another layer in an already expensive system,” Brophy said.
She said brokers should help employers find coverage that fits their budgets and employees’ needs. Understanding a broker’s financial arrangements can help business owners assess the recommendations they receive.
“That's why employers should really care about how their broker is being paid,” Brophy said.
During benefits renewals, she recommends asking brokers to explain their commissions, fees and other compensation. She also encourages employers to explore different ways to structure employee benefits, considering their budgets, employees’ needs and how much financial risk they are willing to take.
“Don't just look at the plans that are set forth in front of you,” Brophy said.
Guest
- Lucinda Brophy, CEO and Founder, Tandem Benefit Partners
