Working without Brokers?

[Guest ShannonMuller]

I work for a company with about 220 (benefit eligible) employees. We currently work with a broker to support our benefits strategy and marketing throughout the year. Last year (after a large premium increase on our medical plan) we decided to carve out the commissions from the premiums and pay our broker a flat fee for their services. Over the past year, we have been cutting costs significantly across the company and we have now begun looking at this cost. In addition to negotiating the fee, I have also been asked to look into the possibility of moving forward without the services of a broker.

Does anyone have any experience with this? Or know of any companies doing everything in-house and working directly with carriers?

Our HR team consists of 5 people, myself being the only one with benefits experience. It is noted that bringing this service in-house may require additional headcount, however, my thought is we could not obtain the experience and time commitment we need for less than the fee we currently pay the broker.

Any help is appreciated!

[GBurns]

I have not done any enrollments for quite a while, but when last I looked the only way to do enrollments without a broker was via a web portal. However. the web portals might not be free.

Additionally, do you have anyone who can do what the broker did? Do you know what the broker did and how it was done?

Historically, as proven by the Spitzer lawsuits, other than getting the rate schedules filed with the state DOI and knowing how to adjust filed rates to produce premiums, you most likely will not know whether or not writing agent/broker etc commissions are being charged even if there is no broker.

I suggest that you negotiate with your broker, otherwise you could be cutting off your nose just to spite your face, as they say.

By the way, What proof do you have that commissions were really carved out?

[Guest ShannonMuller]

I am not concerned with enrollments as they do not do enrollments for us- we use the carrier portal currently.

As far as someone to do what the broker has done, that is what I am trying to figure out. They negotiate with the carriers on our behalf, but I am trying to understand the difference in working directly with the carrier (although I am sure you still pay an agent commission, just not sure if its more, less, comparable). They also ensure that we take all necessary steps to stay in compliance, notify us of upcoming changes in the laws, file 5500s, analyze claim experience, prepare pre-renewal projections, etc. We would certainly have to hire someone to handle these things if we were to decide to do it on our own, but I am not sure I believe it is worth it. What I was trying to find was whether or not anyone else does this.

As far as commissions being carved out, when we received a 34% increase on our medical plan, we then asked to pull out commissions and negotiated a dollar amount, and the premium increase was changed to 30%. If the carrier was paying anything additional it would be reported on our 5500. We also receive a disclosure from our broker, which reports the commissions/fees they receive on each of the plans they support for us.

[lvena]

When a group starts to consider if they should continue their broker relationship, the first question I ask if they have the bench-strength to do the job. And by this I mean both the FTE’s that will be needed and more importantly the knowledge. Your post indicates that you have a staff of 5, with yourself as the only benefits experienced person. I am going to assume that your benefits background is lacking any significant time as either a broker or carrier person. My gut tells me that you should probably not try to go this alone, at least not just yet.

The physical enrollments and the FTE’s are the least of your worries. The lack of knowledge (please, don’t take any offense) would be my biggest concern. Assuming that your broker is competent, you would need to fill some significant holes, including; negotiating with carrier, choosing vendors that you might need, analyzing financing options available to you, benefit analysis, claims analysis and more importantly doing something about those claims, PPACA, legal issues, etc.

Going out on a limb here, but based on what you have posted I am guessing that your plan costs are about $2,000,000 per year and the broker was paid 4% or $80,000. If this is close, my gut also tells me that ditching your broker may save you $80k, but that these savings would be eaten up quickly with the additional costs you will need to incur.

Hope this helps.