If you’ve been seeing steady premium increases year after year, it might be time to look at what’s really going on with your benefits program.
A Real Example Worth Sharing
A mid-sized Texas nonprofit recently came to us after 17 years of watching their benefits costs climb. The HR director was frustrated. Budget was tight, and she needed answers.
When we reviewed their setup together, we found their broker was earning $300,000 annually. For a few hundred employees. Half of that revenue came from supplemental insurance products like cancer plans, accident coverage, and critical illness policies.
How Supplemental Insurance Commissions Work
When a broker sells supplemental insurance, they typically earn 50% to 80% commission in the first year, with ongoing commissions after that. This creates an incentive problem. The more policies sold, the more the broker earns.
We’ve worked with employers where 20 to 30% of employee paychecks were going toward supplemental coverage. That’s a lot of money leaving each paycheck, often for benefits employees don’t fully understand or may never need.
The Employee Side of Things
Here’s what we see happen. An employee signs up for a hospital plan thinking it will help with hospital bills. But these supplemental policies work differently than major medical coverage. Employees end up paying $20 to $40 per paycheck for coverage that might not deliver what they expect when they need it.
These products are confusing, and if no one takes the time to properly educate your workforce, they can’t make informed decisions.
Questions You Should Be Asking
If you’re managing benefits for your organization, you have every right to understand how your advisor is compensated.
How much are you earning in overrides and bonuses above your stated commission?
What percentage of your revenue comes from supplemental products?
Can you explain why these supplemental policies make sense for our specific workforce?
Your advisor is legally required to disclose this information. If they’re not bringing it up, ask. You need transparency to properly manage your benefits program and act as a fiduciary for your organization.
There’s a Better Approach
A well-designed major medical plan, paired with strategic cost management and clear communication, usually serves your workforce better than a stack of supplemental policies.
You shouldn’t have to choose between providing good benefits and managing your budget. Both are possible with the right strategy and the right partner.
DM me for more information.
I’m happy to review your current benefits setup and show you what questions to ask your advisor. No pressure, just clarity.