“Would I get a lower price from another broker? Or if I bought our company’s medical plan directly from Kaiser or Blue Shield? How much would I save if I bought our insurance online? How much more do I pay in premium for all the services your firm provides?”
Last December, the new CEO of a firm we have been doing business with for over ten years requested a meeting to address these questions. It was an excellent opportunity to describe how the small business insurance market (2-50 employees) works in California.
After that meeting, I realized that every business owner and CFO could use a refresher on plan pricing and broker compensation. Here are the answers to these common questions:
No, you would not get a lower price for the same medical product from another broker, by going directly to the insurer, or by purchasing insurance coverage online. Likewise, Shargel & Co. cannot get a lower price for you than another broker.
Each insurance carrier files “standard” rates with the one of two California regulatory organizations, the Department of Managed Health Care or the Department of Insurance.
Small businesses are protected by California’s small business health reform, AB 1672. Your premiums may be no higher than 10% above standard rates, regardless of medical claims. Pricing can be no lower than 10% below standard.
Oftentimes, insurance will charge smaller groups the highest allowable rate and give discounts to larger companies. Our commission is built into these rates. Every customer pays them whether they use a broker, buy direct, etc. Some brokers charge extra fees for services performed. Shargel does not.
Of course, while the pricing for the same product may be the same, Shargel makes sure that you are paying a competitive price for the plans you are purchasing. We prepare pricing summaries so that you can easily compare the cost of similar plans with competing insurers. We stay alert to opportunities that take place when an insurer discounts its pricing for new business for a limited time period. We advise you as we see changes in buying trends among companies so that you stay competitive with your offerings.
How else does Shargel reduce your cost? We always provide you with cost savings ideas about how to structure your benefits plans. You can review some of our ideas here and here. We recommend that you give your employees a choice of benefits plans and cost sharing arrangements that are fair to both employers and employees.You can always count on Shargel for our thoughtful expert advice, our friendly and professional support, our communications materials and on-site meetings and our HR resources.