What kind of relationship do you have with your benefits broker? Do you confide in them as you would your CPA, or do you keep them at arm’s length as if they were one of the many vendors with whom you deal? Whose interests does your broker serve? Those of the insurance companies or yours?
A few years ago, one of my clients, Dave, the owner of a car dealership, contacted me about a $20,000 medical claim that had been rejected by his group health insurer. Dave had gone to an out-of-network provider for a procedure that required prior authorization which neither he nor the provider had obtained.
“I didn’t know I had to do that! You need to call the insurance company and fix this,” Dave told me. I assured Dave that I would do everything I could to help him but that it wasn’t going to be as simple as me calling the insurance company and saying, “take care of this.” I explained to him that I would need details of any communications he had with the provider and copies of any documents he signed so that we could determine whose responsibility it was to obtain the prior authorization. I also explained to him the appeals process and other rights he had under the law.
I sensed Dave was not satisfied with my answer, “I’ve never heard of such a thing. Isn’t there something you can do?” “This is a complex problem, but you have me as your advocate to help you through the process.” I assured Dave at the end of our call. Dave never provided me with any of the information I requested. He didn’t respond to several follow-up calls and e-mails, and later that year, he switched his business to another broker.
Then there is this one. Several years ago I met with a sales executive from a health insurance carrier with which we wanted to contract. “What are you going to do for us? Why should I want to contract with you?” he wondered. “We have a lot of group clients and we want to make sure they have access to every carrier option available to them,” I responded. It seemed like an eternity before he even blinked. A colleague who regularly referred me business and who sat in on the meeting told me afterwards that was the strangest meeting he had ever been in.
What do these two stories have in common? These two individuals saw me as an extension of the insurance company, an insurance representative, a salesman and nothing more. Their view is not unique. Most people view health insurance brokers as representatives of the insurance carriers, commodities that are a dime a dozen. Their equation is only half right: insurance is a commodity, but a benefits broker should not be, and, you’re only hurting yourself if you treat your benefits broker like one. Here’s why.
The Industry Is Evolving
Employee benefits has never been more complex. Extensive government regulation and the dollars involved have raised the stakes. An array of products and financial arrangements, a myriad of compliance concerns, including ERISA, COBRA, HIPAA and FMLA, and employee wellness all contribute to this complexity. More often than not, human resources is expected to deal with this complexity without the benefit of additional resources. They increasingly must rely on resources outside of their companies for help. Of all the individuals a company might consider, benefits brokers are in the best position to advise them and help them navigate this complexity.
The Affordable Care Act (ACA) has brought about a lot of change, but perhaps the most profound change to come is the role of benefits brokers. Benefits brokers are not tied to a particular company and they have a legal duty, an obligation, to serve the interests of their client. The other individuals a company might consider have a narrower, product-specific focus and are all duty-bound to their employers. This includes employees of payroll companies, third party administrators, benefits technology providers, and insurance companies.
Many brokers already offer advisory services that go well beyond just the basics. This includes compliance and ACA advice, human resources and benefits technology tools, wellness programs, and administrative services. A CPA and attorney can address some of the compliance and tax issues but they cannot tie it all together because they lack the detailed understanding of the insurance to put it into context. Nor can payroll companies and other human resources technology providers provide the guidance and advice to help you navigate the places where their technology doesn’t reach. And, their allegiances are to their shareholders, not to you. A benefits broker can serve as a coordinator or a facilitator and tie all of these things together.
Is Your Relationship with Your Broker Dysfunctional?
The old adage that it “takes two to tango” applies to your relationship with your broker too. In my experience, the general public sees the broker as just a “shopper,” someone who quotes and sells insurance. They go from broker to broker thinking that the prices will vary. The irony is that the price you pay is based on factors not in the control of your benefits broker. Your benefits broker has no ability to negotiate better pricing for you. Do you see your benefits broker as just a “shopper?” If you do, you might not be getting the most out of your relationship.
It’s not all your fault, though. Bad actors have contributed significantly to this perception. It is true that many benefits brokers are just interested in selling you the insurance, leaving it to you to figure out the other pieces. Some benefits brokers take the cynical approach and will do as little as possible believing that their clients will drop them as soon as someone else comes along with a better price. Others may either simply lack the expertise to be an employee benefits advisor or, because of liability concerns, they do not want that responsibility. All of these brokers have commoditized themselves. That’s so yesterday, and you don’t want to do business with them.
If you expect your benefits broker to simply be a quote machine that’s exactly what you’ll get. Dave, the car dealer, was never open to having me be his trusted employee benefits advisor. He passed on every meeting request, and, instead delegated any interaction with me to his human resources manager. Delegation, in and of itself, is common in our business, but it was clear from the outset that Dave had a limited relationship in mind from the start. It’s too bad because his decision probably cost him a lot of money.
Had Dave simply taken me up on my offer to help, he would have discovered that I was well-versed in the insurance appeals process, that I had extensive experience negotiating with providers and insurance companies on behalf of my clients, and that I had a strong track record of success. This would have been a better alternative than simply switching brokers. Dave probably ended up eating a cost he could have avoided because he just couldn’t change how he thought our relationship was supposed to work.
It’s in Your Hands
I have learned over the years to better communicate my value and emphasize my role as an advisor, not a shopper, to my clients and prospects, but, ultimately it is in their hands to accept me in that role. For many, this is a new experience, but most are happily taking the leap.
Ask yourself whether you’re open to a relationship with a broker as a trusted benefits advisor. Don’t be passive. Take an active role in finding the right broker. As with any relationship, communication is key. A broker won’t know what you’re looking for if you don’t tell them. Ask any prospective broker for a list of their services in advance of signing any broker of record. What is the range of their expertise? Can they help you with tax and compliance? What tools do they offer?
It’s not enough that they are honest and direct with you, they also need to have the skills and provide the resources you need. In Part 2 of this BLOG, I’ll provide you with a template and describe in detail what you should be looking for in the 21st century broker, your trusted employee benefits advisor.
Your employee benefits broker should be a competent advisor who answers to you and puts your interests first, period. You also need to be open to this kind of relationship. That is our philosophy at Comprehensive Benefit Services. If you want to learn more about the trusted employee benefits advisor call me at (952) 237-6956 or e-mail me at mdmowski@comprehensivebenefitservices.com.