by Will Freeman
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by Will Freeman
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Few insurance brokers are willing to disclose how much they make from their clients’ accounts. Perhaps they don’t believe they do enough work to deserve the money they receive for helping their clients.
Personally, the last thing I review with my clients in our mid-year reviews is Broker Compensation. I want all of my clients to know exactly how much I get paid and how I’m compensated.
Disclosing my compensation also holds me accountable to my clients. My clients are paying me these fees, regardless if they write me a check or it’s paid through the carrier.
If they don’t feel like I’ve done enough work to earn the amount I’m paid, we can either agree on an amount of work that justifies my compensation or I will help them find a broker that better suits them.
Most of the compensation benefit brokers receive comes from Health Insurance. In this article, I’ll show you how to calculate your broker’s total compensation and see if you are getting value from your money.
Health Insurance Broker Compensation
Standard health insurance pays a fee per covered employee per month to the broker of record. Brokers typically don’t get paid for dependents.
The chart below reflects the lowest annualized fee schedule from each carrier. If your broker works for a large brokerage they make more than this. Additionally, carriers offer special bonus programs to these large brokers which add even more compensation.
| UHC | Humana | Anthem | UHC | Humana | Anthem | ||
| 2 | $192.00 | $192.00 | $192.00 | 31 | $7,440.00 | $5,952.00 | $7,764.00 |
| 3 | $288.00 | $288.00 | $288.00 | 32 | $7,680.00 | $6,144.00 | $8,004.00 |
| 4 | $1,200.00 | $864.00 | $384.00 | 33 | $7,920.00 | $6,336.00 | $8,244.00 |
| 5 | $1,500.00 | $1,080.00 | $684.00 | 34 | $8,160.00 | $6,528.00 | $8,484.00 |
| 6 | $1,800.00 | $1,296.00 | $984.00 | 35 | $8,400.00 | $6,720.00 | $8,724.00 |
| 7 | $2,100.00 | $1,512.00 | $1,284.00 | 36 | $8,640.00 | $6,912.00 | $8,964.00 |
| 8 | $2,400.00 | $1,728.00 | $1,584.00 | 37 | $8,880.00 | $7,104.00 | $9,204.00 |
| 9 | $2,700.00 | $1,944.00 | $1,884.00 | 38 | $9,120.00 | $7,296.00 | $9,444.00 |
| 10 | $3,000.00 | $2,160.00 | $2,184.00 | 39 | $9,360.00 | $7,488.00 | $9,684.00 |
| 11 | $3,300.00 | $2,376.00 | $2,484.00 | 40 | $9,600.00 | $7,680.00 | $9,924.00 |
| 12 | $3,600.00 | $2,592.00 | $2,784.00 | 41 | $9,840.00 | $7,872.00 | $10,164.00 |
| 13 | $3,900.00 | $2,808.00 | $3,084.00 | 42 | $10,080.00 | $8,064.00 | $10,404.00 |
| 14 | $4,200.00 | $3,024.00 | $3,384.00 | 43 | $10,320.00 | $8,256.00 | $10,644.00 |
| 15 | $4,500.00 | $3,240.00 | $3,684.00 | 44 | $10,560.00 | $8,448.00 | $10,884.00 |
| 16 | $4,800.00 | $3,456.00 | $3,984.00 | 45 | $10,800.00 | $8,640.00 | $11,124.00 |
| 16 | $4,800.00 | $3,456.00 | $3,984.00 | 46 | $11,040.00 | $8,832.00 | $11,364.00 |
| 17 | $5,100.00 | $3,672.00 | $4,284.00 | 47 | $11,280.00 | $9,024.00 | $11,604.00 |
| 18 | $5,400.00 | $3,888.00 | $4,584.00 | 48 | $11,520.00 | $9,216.00 | $11,844.00 |
| 19 | $5,700.00 | $4,104.00 | $4,884.00 | 49 | $11,760.00 | $9,408.00 | $12,084.00 |
| 20 | $6,000.00 | $4,320.00 | $5,124.00 | 50 | $12,000.00 | $9,600.00 | $12,324.00 |
| 21 | $6,300.00 | $4,536.00 | $5,364.00 | 51 | $12,240.00 | $10,404.00 | $12,552.00 |
| 22 | $6,600.00 | $4,752.00 | $5,604.00 | 52 | $12,480.00 | $10,608.00 | $12,780.00 |
| 23 | $6,900.00 | $4,968.00 | $5,844.00 | 53 | $12,720.00 | $10,812.00 | $13,008.00 |
| 24 | $7,200.00 | $5,184.00 | $6,084.00 | 54 | $12,960.00 | $11,016.00 | $13,236.00 |
| 25 | $7,500.00 | $5,400.00 | $6,324.00 | 55 | $13,200.00 | $11,220.00 | $13,464.00 |
| 26 | $6,240.00 | $4,992.00 | $6,564.00 | 56 | $13,440.00 | $11,424.00 | $13,692.00 |
| 27 | $6,480.00 | $5,184.00 | $6,804.00 | 57 | $13,680.00 | $11,628.00 | $13,920.00 |
| 28 | $6,720.00 | $5,376.00 | $7,044.00 | 58 | $13,920.00 | $11,832.00 | $14,148.00 |
| 29 | $6,960.00 | $5,568.00 | $7,284.00 | 59 | $14,160.00 | $12,036.00 | $14,376.00 |
| 30 | $7,200.00 | $5,760.00 | $7,524.00 | 60 | $14,400.00 | $12,240.00 | $14,604.00 |
Life & Disability Insurance Broker Compensation
These programs pay anywhere from 6% to 15% depending on the carrier and the number of employees insured. Larger groups pay less than small groups. We’ll use 10% for consistency.
Voluntary Life and Disability programs usually pay around the same 10%.
Dental & Vision Insurance Broker Compensation
Brokers typically get a 10% commission on the premiums for dental & vision insurance.
Total Broker Compensation
Now, we’ll add everything together. Use the chart below to calculate the amount you are currently paying your employee benefits broker.
| Line of Coverage | Monthly Premium
Or # of EE’s |
Commission Factor
(x) |
Total Monthly Compensation
(=) |
Total Annual Compensation
(x 12) |
| Health Insurance | Find Annual Amount on Chart | |||
| Life Insurance | (x) 10% | (=) | (x 12 =) | |
| Disability Insurance | (x) 10% | (=) | (x 12 =) | |
| Dental Insurance | (x) 10% | (=) | (x 12 =) | |
| Vision Insurance | (x) 10% | (=) | (x 12 =) | |
| Voluntary Insurance | (x) 10% | (=) | (x 12 =) | |
| TOTAL BROKER COMPENSATION | ||||
Final Thoughts
Now that you have an idea of how much your broker makes on your employee benefits per year, you’ll need to decide if you are getting a good return on investment.
To help, check out our “How we compare” spreadsheet which breaks down all the services we provide our small groups clients. Does your broker do the same thing for the amount of compensation you pay them?
If not, maybe we should talk.
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