Finding an employee benefits consultant with expertise in your industry and firm size can help you create an optimal benefit plan design for your employees, at the lowest price.
Mployer Advisor answers all of your questions about employee benefits consultants, from the services they provide to how they get paid. Discover the information and resources you need to choose the right employee benefits consultant for your company.
An employee benefits consultant helps an employer create and implement the best benefit plan design for their employees at the right cost.
Employee benefits consultants are usually insurance brokers. They have expertise at developing custom benefit plans that span across medical to disability, life and in some cases voluntary benefits, retirement plan options, employee compensation and leave benefits.
Having the right employee benefits consultant can save you money and give you the most strategic benefit package for your human capital goals.
Employee benefit consultants are usually insurance brokers, but whereas insurance brokers primarily serve to work with an employer on accessing and providing specific insurance products, an employee benefits consultant looks at the broad picture and helps recommend different benefit plan offerings.
There is an expectation that employee benefit consultants have expertise across the full benefit continuum and not just medical benefits. They also need to have a general understanding and potentially be able to offer expertise on disability, life, voluntary, compensation, leave and retirement benefits.
It depends. Most will tell you yes, but it is up to you to see their level of experience and expertise. Below are three good litmus tests to make sure you are in good hands.
If so, make them prove it. It's okay to ask. You are not an expert in this space and are not expected to be. Keep asking until you get the answer you need.
If they can only advise you on medical benefits, then the answer is no, they are not an employee benefits consultant. An employee benefits consultant should be able to speak to medical insurance as well as disability, life, voluntary, retirement, leave and compensation, and if they can’t, they should have experts they usually work with on topics about which they are not familiar.
If they can’t speak to that nor have an expert they work with, then they likely don’t have the experience or expertise needed in that area. That’s okay, but be wary of buying something or taking advice about your benefits from someone who has little to no experience.
Again, do not let someone talk around your questions or shift the discussion. Keep asking. There are no dumb questions. You are not the expert in this space, and you are not paid to be. That is why you work with an employee benefits consultant. Make sure that they are the expert.
Employee benefits consultants can be paid in one of two ways, and possibly a combination of the two. In general, their costs are included in what you pay for your insurance. If you are a mid to larger company, then it may be a flat rate.
The most common ways a benefits consultant gets paid are:
For almost all small employers and some medium size employers, your benefits consultant is paid primarily through the commission they receive from selling you the insurance product. Their fees are baked into the price of the insurance. This could run from, on average, 2% of premiums all the way to 10%.
For employers under 100 lives (or 50 depending on the state), the percentage is governed by the state for medical benefits, but other products like voluntary benefits are not necessarily subject to state controls.
Secondarily, brokers receive a “contingent commission” from the insurance carrier for meeting specific aggregate goals, like total clients with a carrier or total lives, new employers, etc. Always ask what types of contingent commissions your broker receives.
For mid to larger employers, your employee benefits consultant could be paid through consulting fees. If you have 5,000 employees, paying a broker a percentage of your healthcare spend does not make much sense. The same plans are available, for the most part, if you have 4,000 employees or 5,000. Thus, you shouldn’t have to pay a percentage of total spend for little to no additional work. Plus, at 4 to 5,000 employees, the costs add up and a small percentage commission of a big number is still a big number.
Depending on the needs of the employer, and the insurance products you purchase for your employees, the employee benefits consultant may be paid a combination of fees and commissions.
Medical benefits include health, dental and vision. These can either be purchased together or separately and there are various factors that drive that decision, depending on networks, payers, bundled costs, expected utilization of each, employer contribution, and more. While medical benefits drive the majority of benefit costs, they are just one piece of the overall puzzle.
Disability benefits include both long and short term disability. The need for these packages will adjust depending on your company size and industry.
For example, a construction company has a higher need to offer short term disability as well as cover more of the out-of-pocket costs than a financial services firm would. Your employee benefits consultant should be able to speak to the benefits and drawbacks for an employer for both long and short term disability.
Life insurance can be structured to accomplish a number of goals, from protecting an individual and their family to “key man life,” which is for specific individuals at a business who may be considered critical to its function. Your employee benefits consultant may or may not be able to offer you life insurance, but they should be able to speak knowledgeably to the product and how you can use it to best achieve your goals.
These benefits can range from accidental death and dismemberment insurance (AD&D) to critical care, cancer insurance, pet insurance, legal insurance and so many others.
The products you need and choose to offer to your employees vary on your specific goals, which tie to your industry, company size and employee needs. Your employee benefits consultant may or may not be able to offer you these products directly, but they should be able to advise you on which products are needed. They should also have a network of experts they can refer you to, if necessary.
Retirement benefits can range from 401(k) plans and IRAs all the way down to antiquated pensions. Employee contributions, company matching and so many other factors are critical for achieving your goals and help to drive employee satisfaction.
The person you choose to manage these funds and whether or not you meet legal requirements in how you offer and manage them are a lot to take on for anyone. Thus, it’s critical you get this right. As mentioned above, your employee benefits consultant may not be an expert in this space, but they should be able to speak it to in general and have partners they can recommend for you based on their experience.
Leave benefits cover everything from paid time off to sick leave, holidays, unpaid leave and more. These are always tricky situations with any employer to know exactly what to offer. The statements, “This is what we’ve always done” or “This is what my last employer did” are not good enough. Your employee benefits consultant should be able to provide insight and advice on how to approach this, providing benchmarks for you to review or other resources to access.
When your employee benefits consultant refers you to someone for disability benefits, life insurance or another product, always ask if they receive a referral fee or part of that broker's commission. The answer is usually yes, and that’s okay, but it always helps to have all cards on the table so that you are most informed when making a decision.
Ever try to ride a bike? The first time it likely didn’t go so well. The second time, though, it probably got better, and then better. Don’t be the first bike for your employee benefits consultant in your industry or with your employer size. Both are critical factors, so make sure your employee benefits consultant has experience with employers in your industry and with your size. If not, you should expect it to go about as well as your first try at riding a bike, because it is certainly the insurance broker’s first try.
Our name is Mployer Advisor, not insurance broker advisor, because you are our priority. We want to make sure you know the right questions to ask, always, so that you are informed when making decisions that impact your employees as well as a large percentage of your company’s expenses.
Yes, yes and yes. Even if you use another company for enrollment, your employee benefits consultant should be there, side by side with you, to make sure everything goes smoothly. If you or your employees have questions, your employee benefits consultant should be there to provide answers. They are your best conduit back to the insurance company who ultimately reviews and pays your claims.
Yes. Ask for help throughout the year. You are paying for it, and the good consultants are there for you. It doesn’t matter if it's medical or any other type of insurance you’ve purchased. If they are truly an employee benefits consultant, and they are getting paid to be, make sure you are getting the value.
Do you have a disability issue or question? Ask the broker. Did they point you to the carrier? Have them go to the carrier with you. Same for life insurance, same for voluntary products, etc.
Your benefits consultant is a resource that you are paying each month. Make sure you utilize them as a part of your team. If you have the right partner, then they should be an expert in your size and industry, and they should be happy to collaborate throughout the year. If not, then it's time to find a new one.
If your consultant only communicates with you around renewal, that’s a definite sign that it's time to make a change.
If so, that’s great, but they should also have expertise in your employer size and industry. If they don’t, you should consider finding a new consultant.
If that was happening in any other part of your life, you would probably evaluate where you were buying the product from. Do the same here. Your employee benefits consultant plays the biggest part in your benefit and medical insurance cost and strategy. Also, if your costs have been going up, their commissions likely have been too. That’s a sign that your consultant isn’t working with your best interests in mind.
As we’ve stated again and again, experience matters. Employee benefit consultants with experience in your space know the common issues, the easy wins, what makes employees happy, how to save money without cutting benefits, and more. Just as you wouldn’t want a surgeon performing their first surgery on you, you don’t want to be the first employer in your industry or of your company size for your employee benefits consultant.
It never hurts to look. You purchase insurance every year and it’s a large cost. You are not hurting anyone’s feelings when scanning the market. You are being a good steward of your company’s money and also doing what the company pays you to do. It is prudent to scan the market every few years.
If you’re looking for a consultant for your company, Mployer Advisor can help. Our goal is to help employers find top-rated employee benefits consultants for their needs.
Mployer Advisor is an independent third party. We provide documented experience by employee benefits consulting firms, showing which industries, company sizes and products they have experience in. We offer the industry's only insurance brokerage rating, a proprietary score called an M Score that evaluates all of those factors.
Additionally, Mployer Advisor showcases customer reviews and feedback to help employers compare and evaluate different benefits consultants.
Our goal is to lift up the entire business insurance brokerage industry by highlighting top performers to ultimately benefit you, the employer, and your employees.