What Is a Health Insurance Broker?

What Does a Health Insurance Broker Do?

When you need to enroll in a new health insurance plan due to a job loss or other reason, you may be uncertain where to start. Health insurance brokers are regulated by the government and earn commission on the health plans they sell. They are trained experts who can:

• Offer recommendations and help you compare plans: Navigating the health insurance landscape can be complicated. Brokers are trained to help you compare prices and coverage.
• Help you apply for financial assistance: If you need help paying for medical insurance, brokers know how to assist with the application process. They may be able to recommend things like premium tax credits (if you're getting insurance through the federal health insurance marketplace) to reduce your cost.
• Help you enroll in qualified health plans: When you find a plan that fits your needs and budget, brokers can help you enroll.

A health insurance broker acts as a guide throughout your entire health insurance plan shopping process. You may even be able to get in touch with them after buying the plan for help understanding terms and associated costs.

Health Insurance Broker vs. Agent

Health insurance brokers carry a broker's license and often also an agent's license, which are regulated by the state in which they are doing business. They work independently and can recommend health insurance plans from multiple insurance companies, who pay the broker commission for plans sold.

Health insurance agents, on the other hand, generally recommend plans for companies they work for directly.

There are two types of health insurance agents:

• Captive agent: These agents only sell plans for one company. They may work directly for the company as an employee or be an independent contractor. Captive agents may receive a salary and commission or work on commission only.
• Independent agent: These agents may sell plans for multiple companies. They are typically contract workers earning commission on the plans they sell.

Both brokers and agents are licensed and state-regulated, and work on a commission basis. This means that you don't get charged for their services; instead, they are paid by an insurance company each time they sell one of the company's plans.

Should You Use a Health Insurance Broker?

There are times when using a health insurance broker to find a new health insurance plan may make sense. Consider these reasons to use a health insurance broker―and some reasons not to―before seeking out their assistance.

Consider using a health insurance broker when:

• You are shopping for a health plan for the first time. Insurance marketplaces are often full of unfamiliar jargon and can be overwhelming. If you are shopping for a health insurance plan for the first time due to a change in employment or aging out of a parent's plan, a broker can help.
• You are self-employed. Self-employed workers don't have access to health insurance from an employer like other workers. Brokers can help them shop for an affordable plan.
• You are part of a small business that needs help administering employee health plans. Some employers use brokers to help their small businesses find plans for their employees. Administering all of these plans can be complicated. Brokers can help with the first stages of finding plans, signing up employees and providing information to employees about the plan.
• You want to qualify for a premium tax credit. Brokers know the ins and outs of saving on health insurance. They can help you find out if you qualify for a premium tax credit, which are credits for qualifying low- or moderate-income individuals or families who sign up for health plans through the federal health insurance marketplace.

A health insurance broker may not be the best choice if:

• You are concerned about taking advice from a commission-based professional. You may be uncomfortable using professional services that are commission-based if you're concerned that the broker will push plans that give them the best commission.
• You have affordable, alternative health plans available. If you already have an affordable, alternative health plan available such as from a spouse's job, you may not need to spend the time searching with a broker for outside coverage. Instead, you can work with your provider's agent to change or expand your plan.

Brokers may be the best option for those who are new to insurance, don't have access to employer-provided insurance, aren't sure how to navigate the federal insurance marketplace or private health plans, or are unsure of what kind of plan they qualify for or need. Using an agent or enrolling in a plan on your own may make more sense when you are familiar with plans and providers and know exactly what you want.

The Bottom Line

You don't have to go into buying health insurance blind. With a health insurance broker providing several options and walking you through the process, you can make informed decisions—for no charge.

With a broker's informed take, you may be able to find a better plan. By targeting the most affordable health insurance plans with the best coverage, you can help save yourself money when a health issue arises and make it easier to access medical care.