What Is a Benefits Broker and Why Does Your Business Need One?

Employee benefits are a powerful tool for capturing top talent. Recent statistics reveal that over 60% of workers consider valuable benefits just as important as a large pay increase when evaluating jobs, and 40% of employees who quit make the decision because of better benefits available elsewhere. In this environment, a benefits broker can have a large impact on employee retention, satisfaction, and productivity. What is a benefits broker and how can you choose the right service?

What Is a Benefits Broker?

A benefits consultant, advisor, or broker is a licensed insurance industry professional who specializes in crafting benefits plans for employers. Employee perks frequently include various insurance offerings:

• Health insurance
• Dental insurance
• Life insurance
• Vision coverage
• Plans for medication or pharmacy discounts
• Coverage for mental health care

Benefits brokerage services involve comparing insurance providers, negotiating favorable rates for your organization, putting together a comprehensive suite of options, and administering the plan once it’s in place.

Benefits Broker Vs. Insurance Agent

When some people ask what a benefits broker is, they have in mind an insurance agent. In reality, there’s a major difference between agents and brokers: whose side they’re on.

Agents work for an insurance company, so they have to recommend policies offered by their employer. Their goal is usually to maximize a commission.

What does a benefits broker do? This professional looks out for your interests. The objective is to find ways to maximize your savings while delivering a plan that makes you and your employees happy.

Types of Benefits Brokers

A benefits broker for small business programs has experience with the unique challenges SBOs face when balancing available capital and employee perks.

Brokers fall into three main categories:

1. National: Full-service, large-scale brokerages with a vast network of insurance industry connections and securities offerings
2. Regional: Smaller brokerage services team with greater flexibility and more personalized solutions
3. Independent: Consultant or brokerage team with no contractual ties to any insurer

In general, the larger the benefits brokerage firm, the less flexible the packages but the greater the pool of plans available to choose from.

What Are the Advantages of Using a Benefits Broker?

Outsourcing employee benefits management to an experienced broker can provide many advantages for human resources managers and small business owners.

Flexibility

The needs of your staff change over time. Workers who are getting closer to retirement age appreciate help with financial planning. New parents may look for life insurance, enhanced maternity considerations, or family health care plans. With a brokerage, it’s easier to put together (and make changes to) a complete package that feels personalized to your business.

Expertise

As a small business owner, it’s normal to ask what a benefits broker is. You’re an expert in your industry, not necessarily insurance or investments. A licensed benefits advisor can help immensely:

• Answering questions
• Explaining complex insurance terms
• Showing a variety of options
• Pointing out the pros and cons of different programs

A good broker stays by your side during the selection process. That way, you don’t have to worry about surprises down the road.

Compliance

Employers must usually follow state, federal, and industry standards for benefits programs, including:

• Consolidated Omnibus Budget Reconciliation Act
• Fair Labor Standards Act
• Family and Medical Leave Act
• Employee Retirement Income Security Act
• Affordable Care Act

Even though many employee benefits are voluntary, laws set minimum standards for these programs. Having expert guidance for compliance can help you avoid headaches, costly penalties, or lawsuits.

Cost Savings

Brokers do far more than compare available rates from various insurers. A broker can negotiate on your behalf, actively securing lower rates than you’re likely to find otherwise. They can also leverage years or decades of market knowledge to seize excellent opportunities to save money for your business.

Efficiency

Running a business takes significant time and concentration. It’s not easy — even for HR professionals — to balance organizational duties with employee benefits management. Some entrepreneurs even forget to renew necessary documents. Investing in a benefits professional to perform these tasks is money well spent, alleviating your burden significantly.

Risk Management

Any employee benefits brokerage worth its salt should provide risk management services. This involves identifying risks for company-wide benefits plans, developing mitigation strategies, and offering suggestions for implementation.

What Does a Benefits Broker Do?

The process of creating an employee benefits plan varies depending on the size of your organization, but you can generally expect the following stages:

• Assessment: An employee benefits broker begins by meeting to discuss your company’s needs and objectives, including the size of your workforce, employee demographics, industry employment trends, and budget considerations.
• Package planning: Next, the broker performs in-depth research, putting together a tentative plan with numerous options to choose from.
• Negotiation: Once you provide the green light to the final selections, the advisor contacts the relevant providers and secures excellent rates and favorable terms that meet your agreed-upon objectives.
• Enrollment: Your benefits brokerage firm can streamline the insurance onboarding process for your employees, providing clear instructions and sign-up support.
• Ongoing support: Brokers who have a good reputation provide support throughout the year, from managing your packages to answering employee questions.

At HUB International, our employee benefits management services include regular communication with you or your HR team, claims assistance, and flexible plan administration.

How To Choose a Benefits Broker

What a benefits broker is depends on your organization’s scale, core values, goals, and employees. It’s hard to beat an HR benefits specialist with various insurance, retirement, and wealth management programs.

Prioritize expertise and reputation. Look for customization options to stand out in a competitive job market. Compare the fees different brokers charge, but don’t make your decision based on underlying costs alone. An experienced broker can save you money in the long run.