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- Health insurance brokers help you find the best policy for your needs
- Unlike agents, they work with multiple insurers
- Reports of Obamacare driving health insurance brokers out of business are greatly exaggerated
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There is a great deal of confusion about what health insurance brokers actually do. Many people mix up health insurance brokers and insurance agents. The Affordable Care Act, also known as Obamacare, is another source of confusion. The creation of health insurance marketplaces made people think that the health insurance brokers no longer operate. However, this is not the case.
There are new restrictions and standards that health insurance brokers have to operate within. It is important that you understand what your health insurance broker does because health insurance brokers can you save a great deal of money on your coverage.
Health insurance premiums have been going up lately, so you need to save money wherever you can. To save the most money by using a health insurance broker, you need to understand how they operate.
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Health Insurance Agents vs Brokers
To understand health insurance brokers, you need understand the difference between brokers and agents. The short version is that agents work for one insurance carrier, while brokers are independent and can provide you with the best plan no matter what carrier the plan is administered by.
Some people say that agents can provide you with the same plans at a lower cost due to their close relationships with the insurers they work with. However, this is not always the case, especially when it comes to health insurance.
Brokers, on the other hand, can provide you with a plan that meets your needs more effectively than agents can. This is because they can provide you with options from several different carriers.
How Health Insurance Brokers Make Money
To better understand what a health insurance broker does, it is vital to understand how they make their money.
Health insurance brokers make their money through either a flat fee on plans they sell or a percentage of the plan’s cost to the buyer. This means they have an incentive to be as helpful as possible and provide their clients with the best options possible.
Contrarily, agents have a base salary. They make commissions for the plans that sell, but not as much other compensation is tied to the level of service they provide to their clients.
Why You Need a Broker
Brokers do what they do for a reason. They are a necessary part of the health insurance industry. It is possible to purchase a health plan by yourself without the assistance of a broker, but it is much more difficult.
Brokers are experts in the different types of health insurance plans currently on the market, and know which one is best for you. They can often get discounts, as well. Keep in mind that the health insurance is a vital part of your life. This is even truer now that the Affordable Care Act is in effect and everyone is required to have health insurance.
After You Buy
When do you buy car insurance, home insurance, or even life insurance the purchase of the policy is usually the end of the process. When you are purchasing those types of insurance, you can usually buy it and forget about it. This is not the case with health insurance. This because the health situations of yourself and your family can change at any moment. This means your insurance needs change, as well.
Experts say that about 80 percent of the brokers who comes after the purchase of the policy. Brokers can make sure you always have the best insurance policy for you or anything your family needs at the time. This may be the most important duty of a broker. Brokers can even suggest plans that better suit your needs as your needs change.
The ACA and Health Insurance Brokers
The Affordable Care Act which has been in effect for six years now has changed the way health insurance brokers go about their business drastically. Health insurance companies are now required to spend at least 80 percent of their premiums directly on health care. In effect, this means that brokers are receiving less compensation from health insurance companies.
Some brokers say their commissions have decreased by as much as 50 percent. State health insurance exchanges, which were introduced in 2014, have also hurt the bottom line for health insurance brokers. Since this development is more recent, there’s not as much hard data on how much this has affected brokers. However, many experts in the field are more optimistic than you might expect.
While some are saying that this is a difficult time for health insurance brokers, others are saying that these fears have been greatly exaggerated. Some savvy brokers are focusing on small business health insurance exchanges and are seeing excellent results.
In Massachusetts and Utah, which introduced health insurance exchanges before the Affordable Care Act, health insurance brokers focused on providing plans to small businesses.
Previously, health insurance brokers have been focused on individual plans. However, it seems that one of the basic tenets of the job is changing dramatically. Whether this development will continue or not remains to be seen.
How Health Insurance Brokers Service Small Businesses
Brokers have always sold plans to small businesses. However, many brokers are focusing on business policies as the individual market has tightened up. Many small business health insurance exchanges feature plans sold by brokers.
Many companies involved in these exchanges report they pay a great deal of broker commission. Some of the more successful brokers note that small business policies make up a large percentage of their bottom line. They encourage other brokers to focus on small business policies and know that they can be just as profitable as individual policies. While there have been many problems with the
While there have been many problems with the state health insurance exchanges, these problems are getting fixed and the exchanges are getting better as time goes on. As this happens, the potential to make money from these exchanges increases.
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[su_spoiler title=”References:” icon=”caret-square” style=”fancy” open=”yes”]
- https://www.healthcare.gov/glossary/broker/
- https://www.healthcare.gov/lp/agents-and-brokers/
- https://www.healthcare.gov/agents-and-brokers-register/
- https://www.healthcare.gov/small-businesses/provide-shop-coverage/using-insurance-agents-and-brokers/
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