Voluntary & Other Employee Benefits

Part
01
of three
Part
01

Brokers vs Consultants

Employee benefits brokers are those who provide and have access to information about different employee benefits options. Brokers also help employers choose the appropriate offerings by extending their expertise and inputs on market and industry trends. Benefits consultants would typically offer more services than benefit brokers would, such as assistance with multiple benefits and in-depth decision and consulting assistance to both, employers and employees. It was found that the fee structure differs from brokers to consultants based on the nature and the number of add on policies provided. Companies that are key examples of consultants are Mercer — Health and Benefits, Willis Towers Watson — Health, Wellbeing, and Productivity, and USI Insurance Services — Population Health Management. The key company examples for employee benefits brokers are Benefit Brokerage Services and Britton Gallagher Brokerage Services.

BASIC Difference: BROKERS VS Consultants

  • Typically, a “Broker” is someone who has access to various options in a particular field of specialization and helps employers narrow down their choices to obtain the best solutions. Employee benefits brokers are those professionals who provide and have access to data on the wide range of employee benefit options. These brokers help employers select benefits offerings that suit their needs by providing insights and expertise based on market trends.
  • Benefits consultants, on the other hand, are known to provide more services than brokers would. These services would typically include in-depth decision-making and consulting assistance to employers and employees and assistance with multiple benefits.
  • The fee structure is found to differ from consultants to brokers, depending on the number of add-on policies needed and the nature of the benefits included.
  • According to Parker-Smith-Feek, where employee benefits are concerned, "a consultant is always a broker, but not every broker is necessarily a consultant".
  • While a broker's role is to help customers purchase the right insurance policy, a consultant's role is to help clients with the best possible structure of a program.
  • A consultant will also take the environment where the employees work and live to create a comprehensive benefits program.

Services Provided: BROKERS Vs Consultants

  • Some benefits brokers might work for just one organization, for example — a health insurance provider, and will attempt to steer their clients through options that only the organization provides. Other benefits brokers may not be connected to one provider alone but may specialize in particular classes of benefits.
  • It is also found that certain benefits brokers have a large range of benefits options but do not have the necessary know-how across all the options.
  • According to Business Benefits Group, benefits consultants are found to be more favorable among businesses due to the fact that they are not particularly partial to any one insurance provider. Most consultants work with various insurers to maximize their client's value.


SERVICES and Benefits of a BROKER

  • Majority of benefits brokers specialize in some form of insurance and therefore, can provide assistance and information in opting for the right type of insurance program.
  • Brokers help employers adhere to the various compliance acts concerning benefits, for example, the Affordable Care Act (ACA) and the Employee Retirement Income Security Act (ERISA).
  • Brokers provide advice on the right means of minimizing total costs, such as reducing total premiums.
  • They assist with employee communications that are most commonly related to benefits education and enrollment.
  • They also help with reviewing contacts and with leveraging benefits providers for the best solutions.
  • Brokers analyze their clients' existing claims and benefits to offer advice on the required changes that must be made along with potential cost savings.
  • Brokers also provide advice on what needs to be changed with existing benefits packages based on the client's employee demographics and previous utilization rates.
  • They offer direct assistance to those employees who have claims, coverage, benefits, or have questions on the services they provide.
  • It was found that brokers might have contracts with certain insurers and thus would make recommendations that promote the particular insurer by providing clients with trade-offs and discounts on programs.
  • The fee structure for brokers is most commonly bundled along with the coverage package offered. Some brokers are found to work on a standard rate based on the client's specific requirements.

Services & Benefits of benefit consultants

  • Employers who work alongside benefits consultants have the advantage to gain a thorough insight into the understanding of their business and the way their employees think. This process will ensure that they obtain the best value of their benefits package.
  • A benefits consultant provides business-owners with advice and knowledge on the insurance market, including changes and trends that might affect their business.
  • Some services that consultants provide are health and wellness consulting, insurer claim audits, taxation support, vendor service monitoring, benefit plan financial management, financial accounting audits, and plan design development.
  • Benefits consultants are generally highly knowledgeable about compliance, risk management, legal and regulatory aspects, and everything that is related to the health marketplace.
  • Benefits consultants collaborate with clients to develop a transparent and professional relationship for better long-term success.


Benefit Broker companies: Examples

#1 Benefits Brokerage Services

  • Benefits Brokerage has served for over 20 years as a "General Agency" to empower benefits brokers with a vast pool of experience.
  • The company has an Ancillary Product offering broad and has established itself as a specialist in the area of alternative funding.

#2 Britton Gallagher Brokerage Services company

  • This private benefits insurance broker values the relationships developed with clients. The company's consultative approach allows it to work with a wide range of organizations from small local companies to large enterprises with multiple locations across the country.
  • The company's strategy of direct access helps them to design medical programs that maximize budget, maintain employee satisfaction, and remain competitive within the market.

Benefit Consultant companies: Examples

#1 Mercer — Health and Benefits

  • Mercer is considered to be a leader in the global health benefits industry. The company offers innovative solutions that address the wellness and health needs of their employees and clients.
  • Mercer provides a comprehensive range of health benefits solutions to various businesses. The company offers access to experts from the local market along with expertise from international resources that provide advice on innovative benefit strategies and regulatory compliance.
  • Mercer Workplace Health offers an approach that helps employers enhance the performance of their employees and overall business through improved engagement, productivity, and cost reduction in the areas of health incentives, internal measurement, engagement, brokerage, and benefits design.

#2 Willis Towers Watson — Health, Wellbeing, and Productivity

  • Watson develops various wellness strategies and introduces governance frameworks. The company believes that the major components in the field of health and wellbeing are obtaining relevant information for analysis, understanding potential health risks, and maximizing participation.
  • The company's Health and Group Benefits Practice helps to design, perform, and manage health and wellness programs that strategically operational for clients at any and every stage of the wellness cycle.

#3 USI Insurance Services — Population Health Management

  • USI Insurance Services has one of the most comprehensive and largest network of Population Health Managers (PHM) of any key brokerage in the United States. The expertise of their wide range of professionals ranges from clinicians, nutritionists, program managers, health promotion specialists, communication specialists, to data analysts.
  • The health management services the company provides, include population health management program feasibility analysis, program design, implementation, analysis, and reporting, budget guidance and incentive models, targeted communications to increase engagement, predictive modeling and large claims analysis, and chronic condition and disease management strategies.
  • The company's benefits team utilizes the platform, USI ONE®, a strategically different approach taken to tackle risk management and employee benefits. USI ONE combines proprietary business analytics with a range of local and national experts to evaluate the customer’s risk and determine targeted solutions. Customers then obtain a tailored profile of recommendations to improve their employee benefits schemes.



Part
02
of three
Part
02

How Consultants & Brokers Choose Benefits

Consultants selling voluntary/other benefits usually carry out a risk assessment to identify the pertinent risks prevalent in the industry and then offer selected recommendations to the employer. Insurance brokers work for the company providing the benefit and receive payouts/benefits in the form of commissions for the recommendations they make to the employer.

CONSULTANTS

  • Insurance consultants typically charge a consulting fee for the recommendations they make and do not receive different payouts/benefits based on the business employer’s choice of policy.
  • They will carry out a risk assessment for the employer by paying a visit to business premises to ask questions about its operations, analyze workplace safety, and identify the pertinent risks prevalent in the industry.
  • Insurance consultants are professionals who leverage mathematical and statistical understandings to establish the financial risks of their clients.
  • They also use currently available data about the insurance industry to evaluate the needs of their clients to provide adjustments for the insurance plans.
  • Benefits consultancy firms work on a commission basis and operate independently from the company providing the benefit or the insurance carriers.
  • This ensures that the consultants are recommending options purely based on their clients’ best interests.
  • Benefits consultants also use the method whereby they have a list of what other companies in the geographic region and industry are offering to ensure that they provide competitive recommendations.
  • They also sometimes survey employees to determine the most valuable benefits.
  • Benefits consultants also conduct an in-depth analysis of the business of a company to determine a budget and deduce if certain benefits offer tax advantages over other types.

BROKERS

  • Some brokers may work for the company providing the benefit exclusively and therefore direct them only through choices from that provider.
  • Others may not be tied exclusively to the company providing the benefit or specialize only in one type of benefit.
  • Brokers receive payouts/benefits for the recommendations they make to the employer.
  • The payouts/benefits are provided in the form of commissions from the premiums charged to policyholders by insurers.
  • The base commission brokers received is the “normal” commission earned on insurance policies which are usually expressed as a percentage of the premium and varied depending on the type of coverage.
  • Contingent or incentive commissions are given to the reward brokers for reaching a certain volume, profitability, growth or retention goals established by the company providing the benefit.
  • This practice is considered controversial because brokers represent insurance buyers and some of them collect contingent commissions without the knowledge of their clients.
  • Contingent commissions may also motivate brokers to steer insurance buyers to purchase policies that are particularly lucrative for them.
  • It is recommended that brokers who accept contingent commission should disclose this fact to policyholders.
  • These days, some brokers refuse such commissions.
Part
03
of three
Part
03

Voluntary Benefit Vendors Selling Directly To Employers

Voluntary benefit vendors do not sell directly to employers but they sell through Career Agents, Classic Worksite Brokers, Worksite Specialists/Enrollment Companies, Benefit Brokers and Occasional Worksite Producers through certain conditions as mentioned below.

Voluntary benefit vendors sell through:

  • Career Agents: These producers primarily work for a single company and sell its voluntary/worksite products.
  • Classic Worksite Brokers: These are brokers that focus on voluntary sales through small to medium-sized operations.
  • Worksite Specialists/Enrollment Companies: This segment is made up of large marketing organizations whose main focus is on supporting other brokers who call for their expertise in voluntary.
  • Benefit Brokers: These distributors normally focus on employee benefits, mainly traditional group benefits.
  • Occasional Worksite Producers: These are insurance generalists. These producers have a small agency that sells insurance products aside from the voluntary/worksite group, individual, or property.
  • There are other ways to get voluntary benefits. It can be through an employee benefits broker or by contacting an insurance agent.

The applied conditions are mainly health-related such as:

  • Critical illness insurance: This coverage matches major medical coverage by providing a single payment benefit for an employee diagnosed with a critical illness covered by the insurance.
  • Hospital indemnity insurance: This coverage provides a single payment benefit to help with the out-of-pocket expenses related to a hospital stay.
  • Accident insurance: This insurance plan helps offset the medical expenses resulted from an accidental injury.

Additional INSIGHTS

  • Voluntary benefits offer an additional means of revenue to brokers that can be long-term.
  • These programs are huge in an employer’s ability to attain and retain top talent.
  • Most voluntary benefits can be added to an employer’s benefits program for little to no cost to the company.
  • Legal usually give employees access to attorneys at a reduced cost.
  • Monetary loss as a result of identity theft is not covered by identify theft protection.

Sources
Sources

From Part 02
Quotes
  • "Here's how it typically works: Insurers pay brokers a commission for the employers they sign up. That fee is usually a healthy 3 to 6 percent of the total premium. That could be about $50,000 a year on the premiums of a company with 100 people, payable for as long as the plan is in place. That's $50,000 a year for a single client. And as the client pays more in premiums, the broker's commission increases."
Quotes
  • "Choice is the very framework of private exchanges, and we have this tool that already recognizes that benefits are no longer a one-size-fits-all model. Individual desires need to be reflected in individual considerations and private exchanges are the vehicle for delivering this to clients who are trying to address the realities of today’s employee marketplace"
Quotes
  • "It’s important to note, however, that not all employee benefits brokers are the same. Some may work for one organization, such as a large health insurance provider, and therefore steer you only through choices from that provider. Others may not be tied to only one provider but may only specialize in one type of benefit. Still others may have a larger base of benefit options to consider but may or may not have as much depth of knowledge across all of the choices. There are a lot of things to consider."
Quotes
  • "Both benefits brokers and voluntary brokers said their top products shifted in the past few years from primarily life and disability coverage to accident, critical illness and hospital indemnity."
Quotes
  • "Conflict of Interest Insurance agents who work for a company might be able to provide advisory services on par with what an insurance consultant offers. But insurance agents have a conflict of interest if they stand to profit from a business owner’s choices. For example, an agent might make higher commissions on certain insurance products, which might serve as an incentive to recommend those policies over more appropriate or affordable options."
  • "Independent Consultants To avoid taking the advice of someone who has a conflict of interest, businesses can hire independent insurance consultants who don't stand to profit from recommending one insurance policy over another. Rather, insurance consultants charge a consulting fee for the advice they give, but don't take a commission or profit in any other way from the policy choices a business owner makes."
Quotes
  • "These consultants are professionals who use the mathematical and statistical knowledge to determine the financial risks in the client's future and help them pick the right option that will match their needs."
Quotes
  • "Brokers are not appointed by insurers. They solicit insurance quotes and/or policies from insurers by submitting completed applications on behalf of buyers"
Quotes
  • "A benefits consultant can advise employers on what other companies in the geographic region and industry offer, to ensure that their benefits package is competitive. "
  • "A consultant can also poll employees to determine which benefits are most valuable to them. "
  • "a benefits consultant can perform an in-depth analysis of a company’s business to establish a budget and figure out if certain benefits offer tax advantages over another type of benefit."
Quotes
  • "smaller brokers may simply offer a review of the best plans, match you with a solution that best fits your needs – and that’s it. "
  • "Larger brokers, on the other hand, have the capacity to offer a range of value-added services such as claims assistance and renewal support, often at no extra cost."
  • "Some brokers are also specialists in certain products (e.g. group health insurance), and even offer additional services depending on their area of expertise. "
From Part 03
Quotes
  • "The U.S. workforce heading into 2019 is everchanging. We have a younger labor pool combined with a tighter market which ultimately requires employers to be always looking out for improvements to their benefits programs. After all, an employer’s benefits program is typically evaluated and scrutinized the most by potential employees deciding if they want to accept a job or not with them. Benefits brokers should be offering the following top voluntary benefits to their clients to add to their existing programs."
Quotes
  • "voluntary business often think that product dictates success in the market. While product—along with price, innovative design and compensation—often drive sales for other insurance businesses, that simply isn’t the case with voluntary sales. Newcomers or those that have only a minimal presence in the market often mistakenly think that if they just build the “best” voluntary product, with the best features and benefits at a good price, brokers will be excited about selling it and, in turn, sales will be great."
Quotes
  • "Voluntary benefits range from life category to life category such as health, dental, wellness/lifestyle, financial security, personal/miscellaneous, and more. There are tons of in-demand voluntary benefit options that employers can add to their packages at very little or no cost to them."
Quotes
  • "It's important that the carrier works with you (the employer) to help determine what best suits your overall employees' needs as well as your business and budget. Many providers offer support services such as communication and enrollment of benefits, on top of the benefits themselves, which can really help employees make the most suitable selection."