insurance

Health insurance 'Sherpa'? Agent or broker

scrabble board health records
Highlights
  • There's a difference between a health insurance agent and a health insurance broker.
  • With health insurance, you may want a professional to guide you as your needs change.
  • The new national health care law makes agents and brokers uneasy, maybe prematurely.

A health insurance agent or broker can save you time and money, whether you're an individual seeking coverage or a business owner shopping for the best medical plan for your employees.

Licensed health insurance agents and brokers, known in the trade as "producers," are like insurance Sherpas to help navigate the complex hills and trails of America's health care system. "Captive" agents work for one insurance carrier alone and are typically employees of that company. Independent agents, also known as brokers, work with several carriers who pay them either a percentage or flat fee on plans they sell to their clients.

Agent vs. broker

Which is right for you? It depends. An agent representing a carrier directly may be able to offer you a lower rate, easier plan changes and a closer relationship with the insurer. A broker, on the other hand, may be able to find you a better fit by combing the market.

If it seems like a tossup, your best move may be to research agents and brokers online and even meet a few before choosing your approach. And, understand that there's little advantage to working with multiple agents because a broker can approximate the same results.

Agents and brokers make their money through commissions paid by the insurance company for making the initial sale. As incentive to keep you a happy camper, they can receive additional compensation when you renew.

What's the risk in forging ahead into the insurance market without an agent or broker?

"You may choose not only the wrong product, but you may not be with the carrier that is going to help you the most," says Scott Leavitt, senior vice president of sales for San Francisco-based Self Health Network. "With health insurance, there are a lot of moving parts and you're buying something for a long period of time."

The difference with health insurance

Unlike purchasing auto, home or life insurance, buying a health policy is just the beginning, not the end of the process. Why? Your health and that of your family can change constantly -- and so can your insurance needs.

"About 80 percent of what an agent does comes after the point of sale," says Leavitt, who also is past president of the National Association of Health Underwriters, or NAHU.

He says look at life insurance by comparison. "You only have one claim: You die, they pay and you're done," Leavitt says. "In health insurance, an agent remains your advocate."

Since most of us receive our health insurance through our employer, we see very little of the ongoing services that agents provide. To give a few examples, NAHU says agents:

  • Assist clients with claim issues, including writing letters to doctors and hospitals and compiling documentation to help resolve claims.
  • Negotiate renewable rates for employers.
  • Explain plan designs, benefits and options to employees.
  • Resolve billing issues.
  • Help COBRA-eligible beneficiaries with coverage following the loss of a job.

Some of those services may soon be changing in the face of health care reform, however.

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