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Summary: Choosing the right benefits broker can make a big impact on your employee satisfaction and compliance. This guide covers essential best practices to help you evaluate, select, and work effectively with a broker who fits your organization’s needs.
A benefits broker is an individual who helps employers design, source, manage, and administer employee benefits. Benefits brokers are experts in negotiating contracts and getting the maximum value from different plans to support their clients.
According to SHRM, benefits account for 25–40% of a company’s payroll, which is enormous! For this reason, it is essential to have a skilled benefits broker who can manage these costs effectively.
Benefits of Hiring a Benefits Broker
You may be wondering if you need a benefits broker. Here we will highlight some benefits of having a dedicated benefits broker so you can decide for yourself if you need to hire one. Our recommendation is a yes!
Expert Market Knowledge
Benefits brokers are subject matter experts when offering the right benefits for your employees depending on the industry, market trends, employee count, and business size. Benefits brokers also consider location and client budget to design benefit plans.
Regardless of your industry, such as healthcare, retail, IT, or nonprofit, a skilled benefits broker knows the most competitive benefits packages for your industry and workforce.
Compliance Support
Whether it’s tax filing or benefits, you have to stay compliant with applicable laws and regulations to avoid penalties and lawsuits. Benefits brokers are experts in knowing compliance implications for the offered plans and can help you abide by them. They also stay updated with changing laws, such as COBRA and ACA, so you do not have to worry about them.
Cost Saving
Seasoned benefits brokers usually have an extensive network of carriers and can save employers more money when getting it through the broker rather than contracting them directly. As mentioned before, benefits amount to 25%-40% of payroll so you can probably save a good chunk of money through offering benefits via a broker.
Streamlined Open Enrollment
The open enrollment period can be stressful to manage every year. But, benefits brokers often help manage the whole process efficiently and timely. They may also offer access to their platforms to elect and enroll in benefit plans, which helps streamline the process even more.
Flexible Employee Support
Having a dedicated benefits broker also means you get year-round access to benefits support, which is essential to answer employee questions and address their concerns when choosing their plans. Benefits brokers are experts in understanding each employee’s situation and recommending the best plan based on their financial situation, coverage, and number of dependents.
Attract & Retain Top Talent
Benefits brokers can help you choose the best and most competitive benefit plans based on your business. When you offer the right benefits, it increases the value of the total compensation package for potential employees and can help attract and retain top talent effectively.
Best Practices to Hire a Benefits Broker
1. Analyzing Your Needs
When considering hiring a benefits broker, you need to ask yourself what problem you are trying to solve with the broker’s help.
Do you want them to offer you more competitive plans, help with the open enrollment period, or both?
You also need to consider your business size and potential growth plan to know the right time to engage a benefits broker, if at all.
2. Verify Benefits Broker License & Certification
A benefits broker is required to have a broker license to sell policies and plans to their clients.
Some brokers may need multiple broker licenses depending on the state they operate in. There are also some certifications that are good to have (but not mandatory) that you can look for; for example, the RHU (Registered Health Underwriter) credential is not mandatory, but the individuals who have this certification emphasize professional excellence in the field of health insurance underwriting that employers and peers recognize.
3. Understanding Costs
Benefits brokers operate on different costing models but are paid by the insurance or benefits carriers rather than the client. Some may charge a flat fee for setting the benefits for their clients, while others may charge commissions.
4. Assess Technology
It is recommended to ask the broker if they have any benefits management platform they will provide access to for choosing and managing benefit plans.
Having a dedicated platform for benefits administration and management can help streamline the open enrollment process efficiently.
5. Ask Smart Questions
According to IBIS World, there were 417,730 Insurance Brokers & Agencies in the US as of 2023, which means there are a lot of options to choose from. Choosing the right benefits broker may seem daunting, but here are some questions that can help you make an informed decision:
- Has the benefits broker operated in the same industry as yours?
- Does the broker have experience working with businesses of a similar size to yours?
- Does the broker specialize in a specific area or handle all types of benefits insurance?
- Will the broker administer and manage the open enrollment?
- Will the broker assist with benefit claims?
- Is the broker open to assisting with personalized recommendations for employees?
- What level of support will the broker provide? Only during open enrollment or year-round?
- Will the broker support you individually, or do they have a team to contact?
Charlotte is an Human Resources Information Systems and Martech expect, Charlotte has worked for major brands in the industry including FactorialHR and Tooltester. Originally from Manchester, UK, with a Bachelor's degree from the Manchester Metropolitan University, Charlotte currently lives in Barcelona, Spain.