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The Role of Insurance Brokers in Retirement Health Coverage

Health insurance may seem complicated, but a broker can help you understand the nuances of your company’s plan and its offerings. In addition to providing access to a vast array of insurance options, brokers can provide valuable insights into market trends and new ways for employers to improve their benefits packages. A good broker will have a wide-ranging knowledge of the market and will know which companies offer the best products, service and pricing.

Traditionally, brokers receive commissions for their work. These fees are typically built into the premiums that employers and employees pay for their benefit plans. But some brokers are starting to challenge this model, advocating that they should be paid directly by the employer. This would eliminate the conflict of interest and allow brokers to consider less-traditional insurance solutions for their clients, says Jeffrey Hogan, a regional manager in Connecticut for a national insurance brokerage and one of a small band of outliers pushing for changes.

In some cases, brokers earn enormous bonuses View the article from insurers for signing up large groups of employees to their plans. These payments are typically marked “confidential” but are nonetheless included in the cost of an employer’s plan, and can color which options a broker chooses to present to his clients. Moreover, these bonuses are usually not disclosed to employers and could be obscured by other types of income, such as fees from insurance companies or consulting firms.

While such conflicts of interest are certainly not illegal, they can have a profound impact on how brokers advise their clients and which plans they recommend for purchase. In a lawsuit filed against a broker, for example, the County of Essex in New Jersey accuses a local firm of “product dumping” by encouraging the county to sign up for numerous types of supplemental coverage that brought the broker hefty year-one commissions.

The county is now working with a different firm that it claims has delivered superior results without any product dumping or other inappropriate practices.

Insurance brokers are a vital resource for small and mid-size businesses. They can provide valuable market insights into what larger competitors are doing in terms of their benefit plans, and can work with an organization to design a competitive package that will attract and retain employees.

A broker can also help early retirees estimate their healthcare needs in retirement and weigh the best options for covering them until Medicare kicks in, including finding ways to manage costs with a spouse’s or domestic partner’s company-sponsored health plan, or by enrolling in COBRA (the Consolidated Omnibus Budget Reconciliation Act). Then there are a variety of long-term care strategies that are available to those who haven’t yet tapped into Social Security. For all these reasons, it’s important to make sure you choose a reputable broker to guide your company through its benefits journey. To do so, look for a team that combines industry expertise with skills in human resources, compliance and communications.

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