Every year insurance companies prepare schedules they dutifully send out to their group policyholders. The purpose of which is to outline service fees and commissions paid to their advisers and or benefit brokers. Have you stopped and read those schedules or are you routing them through your broker because they have offered to secure an outside vendor to prepare the 5500s for you as a value-added service? It’s OK to have your 5500s prepared by an outside vendor of your broker’s choosing but it’s not OK if you don’t take the time to do the math and see just how much you are paying your broker for their services. After all, you are most likely a fiduciary of your health and welfare plans. If you aren’t then someone senior to you in your company is. Another thing to keep in mind when you add up all the commissions paid to your broker for things like Medical, Dental, Vision, RX, Basic Life, Basic AD&D, Short Term Disability, Long Term Disability, Legal plans, Pet Insurance, Supplemental Life, etc. is these are either standard scale commissions, broker negotiated commissions or some combination of the two based upon which line of coverage you are looking at. And in many cases, the dollars reflected on these schedules do not include bonuses the broker may have earned due to the number of clients they placed with the carrier(s) in the past year or the number of clients renewed with the carrier(s). More on special producer compensation in another post. So before you electronically file your next 5500 take the time to look at the total commissions and or fees you are paying your broker or brokers. Evaluate whether the remuneration paid to your broker has truly been earned by the services they have been providing over the past 12 months. Remember: you are the client. The broker works for you, not the insurance company and you should pay a fair compensation for services rendered. Brokers should not have to work for free and many of them earn the dollars you pay them but you should know those dollars cold because at the end of the day it is company and or employee paid.
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