But when we look at group health insurance — which is often a top expense for companies — many businesses have been told by benefits brokers that there are only a few options available to them.

However, anyone who takes a step back and objectively looks at the marketplace of health insurance solutions quickly realizes that there are dozens of products in the market competing for your business.

So why don’t employers know about them?

Given how different every business is, wouldn’t some of these lesser-known products be a better fit for certain employers?

At a minimum, shouldn’t benefits brokers be using them as leverage in negotiations?

The answer is “yes”.

So, the question becomes…why are benefits brokers only showing employers the same four options each year?

To understand why employers aren’t being shown more options, we have to understand how benefits brokers get paid.

The federal government’s transparency rules separate broker compensation into two different categories: direct compensation and indirect compensation.

Direct compensation takes place in the form of commissions and fees…

And indirect compensation is defined as bonuses and overrides paid from insurers to brokers.

While just about every health insurance product allows brokers to add commissions or fees to the rates, the dominant carriers also have large bonus programs that reward brokers for stacking business with them, and these bonuses are rarely disclosed to employers.

In other words, the more a broker recommends and sells a particular carrier’s product, the more that carrier pays the broker in bonuses and overrides.

With that being said, benefits brokers make more money by recommending and selling certain types of products over others.

Ok…so why does all of this matter?

It matters because the whole point of using a benefits firm is to get objective, unbiased, advice about how to maximize the return on your company’s benefits investment.

Since Brokers accept bonuses from carriers, they are inherently not very good at providing employers with objective advice about how benefits dollars should be invested.

And since this conflict of interest occurs at the very top of the employer’s healthcare supply chain, it is a key reason why employers waste ~$300 billion a year on healthcare.

That equals roughly $2,500 per employee per year in profit.

Think about what your company could do with an extra $2,500 per employee per year in profit.

How would that increased profit improve your ability to attract and retain employees?

So if you want these results, you need to replace your benefits broker with a fee-based benefits consultant, and here’s how you identify one.

First, they use a contract that clearly states that they do not accept any compensation from vendors associated with health plans.

This means that they charge you a fee for their services, and their compensation is not tied to the sale of a product.

This also means that any bonuses and overrides paid to the benefits firm from vendors associated with the health plan will be credited back to the employer.

Second, their contract clearly states that they will get proposals from a specific number of carriers each year.

The number you agree to is negotiable, but given the number of options in the market, I suggest you have the benefits firm commit to procuring at least 10 proposals a year.

Now that you know that the benefits consultant is financially aligned to give you objective advice about where benefits dollars should be invested, the next step is to make sure they are certified to provide you with this advice.

To help you understand how to select the right fee-based benefits firm for your organization, head over to Health Compass Consulting and download our free buyer’s guide today.