Insurance brokers and agents have a reputation, and it isn’t good. According to reports, only 27% of people trust insurance agents. Unfortunately, this reputation is built on a lot of misconceptions. Don’t worry, though; we’re here to clear the air. Here are the three biggest misconceptions about health insurance brokers.
1. Using a broker costs money and increases my premiums
Most people think that, in one way or another, working with a broker will cost them money. They expect this to come in one of two ways: consultant fees and/or higher premiums. However, this couldn’t be further from the truth.
Most brokers do not charge fees
The legality of broker fees varies by state. If broker fees are legal in a state, then there are also regulations in place mandating that the broker must be upfront about the fees and get permission from the buyer, often expressly written. In many states, broker fees are not legal at all!
Even if broker fees are legal in a state, most brokers do not charge them. No matter where you may be, you can find a broker that does not charge an insurance fee. Instead, they make all their income from commissions.
Speaking of which…
Using a broker does not increase your premiums
Healthcare providers cannot, legally, increase your premiums if you use a broker. Instead, they are obligated to split the premiums with the broker as a predetermined commission payment. The cost to use a broker is already baked into the premium – the plan you choose will be the same price whether you use a broker or not.
2. Brokers work for
insurance agencies, not you
This is a common misconception about insurance brokers. It stems from the fact that many people do not understand the difference between an agent and a broker.
Agent vs. Broker
Health insurance agents represent a single insurance provider. They know that company inside and out and will do everything in their power to help you find the best plan available that their company offers. However, they can only help you with plans offered by their company. If you want to look at options from multiple carriers, then you need a broker.
Health insurance brokers represent individuals. They work with several insurance providers and can shop around to find the best plan available, no matter who provides it. They do not have the power to impact premiums like agents might, but they make up for it with their increased breadth of options.
It works very similarly to real estate agents. In the real estate market, there are buyer’s agents and seller’s agents. A seller’s agent can tell you everything there is to know about the house they are trying to sell. A buyer’s agent, however, will listen to your needs and find the best place for you.
3. Will brokers try to run up your premiums for a higher commission?
This is the misconception that most often turns people away from insurance brokers. It makes sense; insurance brokers make money on commissions, so aren’t they incentivized to sell you a more expensive plan that you don’t need? It’s sound logic if brokers are paid commissions as a percentage. However, that is not the way that the majority of health insurance commissions work.
Commissions and the Affordable Care Act
Most plans that health insurance brokers assist with are Affordable Care Act plans; they account for 84% of individual/family plans. For ACA plans, broker commissions are not affected by premium prices. Instead, brokers are paid a flat rate every month for every plan they are involved with. It does not matter if an individual’s premium is $100/month or $1000/month; the broker is making the same amount of money to help them no matter what. So, the only incentive they have is to find the best coverage for the lowest price.
If someone has better coverage for a lower price, then they are both more likely to make their payments every month and more likely to be satisfied with their healthcare plan. If someone can afford their plan and is happy with it, then they will continue paying their premium every month. If they keep paying their premium, then their broker keeps getting their commission. So, it is in the broker’s best interest to find their clients the cheapest plans they can find with the benefits that they want and need.
Bonus: The Benefits of a Broker
The fact of the matter is this: most people would benefit from using a broker to find health insurance. They have extensive knowledge of the health insurance industry, and their ability to find and compare plans most likely can’t be replicated by an ordinary person. Any costs associated with them are already baked into premium payments for everybody, regardless of whether they use a broker or not.
If you want to work with a broker, then there is no better place to go than Apollo Insurance Group. Our brokers are healthcare experts that can find a plan with the benefits you need on a budget you can afford. Talking to them is totally free with no obligation.