What does a health insurance broker do?
IIf you are in the health insurance market, you may want to consider purchasing a plan through a health insurance broker. While by no means the only option, health insurance brokers are a popular resource for a variety of customers looking for help finding the right policy for them. So what exactly do brokers do and how can they help you? Read on to learn more about health insurance brokers and how to find one.
What is a Health Insurance Broker?
Health insurance brokers play a unique role within the health insurance ecosystem. They act as an intermediary between consumers and insurance companies (or “insurers”), providing customers with expert advice, access to policy information and a selection of recommended personalized options. Brokers must be licensed by the state in which they operate and are paid by carrier commissions rather than customers.
Who should use a broker?
Brokers are popular among the self-employed and other people who don’t have employer-sponsored insurance. They can also be important for business owners who offer a group plan to their employees, as small businesses often lack the resources to fully resolve insurance issues in-house on a comprehensive basis. Brokers assist customers of federally and state-run Marketplace exchanges and can offer advice on government programs, premium tax credits, and other government cost-cutting options. They can also direct customers to off-exchange plans that comply with the Affordable Care Act.
Brokers versus Agents
Although health insurance agents are also licensed professionals who connect clients with insurance companies, the role of a broker differs in several ways. Agents typically represent a single insurance company and rely solely on that carrier’s options when recommending plans. Brokers, on the other hand, represent the customer. In many states, they have a legal duty to help customers find the most suitable plan for them, regardless of the company selling it.
How Health Insurance Brokers Can Help You
Navigate the market
Part of the value of a broker comes from the unique challenges of navigating the U.S. health insurance landscape, where the information available to customers is often incomplete and the products are uniquely complex. Overall, health insurance markets are considered to have high “search friction,” meaning it is relatively difficult to match consumers with the appropriate products.
Naturally, this challenge increases the value of expert intermediaries. One of the most important roles of a broker is simply to reduce the information gathering burden on the client, helping them navigate a sea of options and variables. Additionally, because a broker “watches” the client, their expert eyes are a line of defense against exploitative or duplicitously charged plans.
Brokers provide expertise throughout the insurance buying process. While they provide information on plans and quotes to the customer, they also bring an industry insider’s perspective. By working to understand the client’s unique situation, they can tell if a particular plan that is great on paper would be a good fit for the individual. Brokers answer questions, discuss alternatives and make recommendations based on factors such as the client’s budget, healthcare needs and provider preferences.
What to expect from a health insurance broker
One of the primary responsibilities of a broker is to help educate the client about the health insurance market and explain how their personal circumstances affect insurance. For starters, brokers are there to answer common questions like the differences between plan types and the meaning of industry-specific terms. Brokers should also be aware of applicable insurance laws and regulations, which vary by state and are frequently updated. Brokers also offer valuable perspective on what policies certain types of clients tend to choose and how those decisions play out in the future.
Several plans to compare
After knowing the client’s budget, needs and overall situation, brokers offer quotes, usually a short menu or a few selected options. These selections can include several types of plans from a particular operator, as well as several comparable plans from different operators. Brokers usually provide brochure information for the plans they recommend and discuss the pros and cons of each option with the client.
Support in progress
Brokers are always available as a resource for clients after registration if any issues or questions arise. Customers sometimes want clarification on the details of a new policy and may find that they are unsure about issues such as network limits or the complaints process. Staying available to customers while they actually use their new insurance is also an often overlooked but important part of a broker’s role.
Most of the services offered by health insurance brokers are basically free to the customer. Like agents, brokers receive commissions from insurance companies, which are usually based on a percentage of the premiums for the plans they sell. In other words, the cost of a broker is built into the cost of health insurance in general, so clients should only expect to be charged by a broker if they accept additional services that go beyond the traditional role of a broker.
How to find an insurance broker that’s right for you
Choose the right broker
The most important factor in the broker-client relationship is trust. In this sales model, the same person serves as both personal advisor and salesperson – and although brokers represent the interests of the client, they may still have some level of incentive to sell a particular product. Clients must be convinced that their own interests are the priority. Will the broker proactively explain the downsides of a plan? Are they open to comparing their recommendations to alternatives?
Another important element is communication – not just how a broker interacts, but their ability to translate their expertise into language the client can understand. Although brokers are sought after for their industry knowledge, this is only useful if they can meet the clients halfway. A good broker listens carefully to understand the client’s situation and ensures that their offerings are tailored to the client’s unique needs.
How to find a broker
One of the most common methods is to seek references from reliable sources, such as friends, family members, an accountant or a personal lawyer. There are many resources online that can help you as well, although it’s important to know who is funding the website and for what purpose. The same goes for broker-sponsored websites, which are easily found in online search results.
You can visit healthcare.gov’s Find Assistance program, which allows customers to search an online directory of government-funded brokers, agents, and enrollment assistants. It also allows users to submit a request to be contacted by a broker via HelpOnDemand.com or a state’s online exchange. Other entities not affiliated with a carrier, such as a local chamber of commerce or association of health insurers, may also be helpful resources.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.