Health Care Reform will change your relationship with your broker…

Business Owners, take note.  ObamaCare isn’t only going to change your health plan, options, premiums, who you offer to, how you offer, when you offer, and increase your administrative work load.  Its also going to change how you work with your broker.  Here’s why:

If you have been confused in the past by your health care renewal, its only going to get (much much) worse this year.  You will really need the help of a competent broker.  The typical business owner relies on brokers to provide day-to-day service, guidance, advise on policies, integration with workers comp and disability issues.  Then at renewal they expect a full market search, and recommendations based on their specific business needs, a clear explanation and understanding, and help selecting choices.  Then they expect enrollment support, educational meetings, and hand-holding with the employees.  And we love providing all of that.

And yet, that will be harder to find.

Currently, to provide the services you expect, your trusted advisor got paid 3-5% of premium.  So for a typical 10 life group, 5 singles, 5 families, in most areas of the country that would come to about $285-$475 a month.  (If you think that is a lot perhaps you’re not getting what you are paying for!)  With the Advent of Health Care Reform, a number of changes have come together (Medical Loss Ratios, Exchanges, etc) that have already lowered compensation in all areas of the country.

As an example, Vermont has just proposed limiting broker compensation on the small business exchange to $15/month/employee in 2014, and $10 in 2015.    This would lower the brokers comp from an average of $380 to $150 this year, and $100 next year.  Imagine being asked to provide your current product and service level for 74% less going forward!  You couldn’t do it, either.

Some brokers are leaving the business.  Others are reducing their services.  Many are working on cost-efficiency methods centered around technology.  But in most cases, you will have to agree to pay your broker part of their fee, or do more yourself.