The Changing Landscape of Health Benefits Broker Compensation
Strategies for addressing the rising cost of broker compensation
Health plans are facing significant downward pressure on administrative costs as a result of health reform and unfavorable economic trends. In response, health plans are scrutinizing their SG&A expenses, including broker compensation, for potential cost savings.
While the need to address broker commissions is clear, the future role of the broker is less certain. Shifting state regulations regarding broker roles within health insurance exchanges will increase the influence of brokers in some states, while other states are seeking to limit broker importance. In addition, the evolving role of brokers as employer “navigators” for health reform indicates the expanding footprint that brokers might play in the future marketplace. Faced with a certain need to reduce broker costs, coupled with great uncertainty around the role and importance of brokers within the markets they serve, health plans cannot afford to take a “one size fits all” approach to this challenge.
As health plans look to reduce overall broker commission expenses, opportunities exist to do so strategically in a way that minimizes impacts to broker effectiveness and service. Realignment of incentive structures for top brokers can be profitable for health plans and top producers alike, if properly planned and executed. At the same time, effective design and communication of revised broker incentive structures may actually lead to increased performance and rewards for top producers while also achieving the goal of reducing overall health plan administrative spend.