How Do Health Insurance Brokers Get Paid (and Is a Broker Free to Use)?

Where the money comes from

Every health insurance premium includes a small allowance for distribution, the cost of getting the plan sold and serviced. When you enroll through a broker, the carrier pays part of that allowance to the broker as a commission. When you enroll directly on a carrier's website or on the marketplace with no broker, the carrier keeps it. Either way, you pay the same premium. Individual and family plan rates are filed with state regulators and cannot be different for the same plan because a broker was involved.

Commissions are usually a flat amount per member per month or a small percentage of the premium, paid as long as the policy stays active. That structure matters: a broker is paid to keep you covered and satisfied, not just to sign you up once.

So is a health insurance broker really free?

For individual and family coverage, yes, in almost every case. You pay nothing to the broker and nothing extra on the premium. The exceptions are:

• Fee-based consultants. Some advisors charge a consulting fee instead of, or on top of, commissions. That is legal in many states as long as it is disclosed in writing before you pay. Ask.
• Lead-generation websites. Some sites that look like brokers are actually selling your contact information to multiple agents. They are not charging you, but you will get a lot of calls. A licensed broker's name and license number should be easy to find.
• Marketplace enrollment. Brokers who are certified with HealthCare.gov or a state exchange can enroll you in a marketplace plan at no cost, and you receive the same subsidy you would get doing it yourself.

My own answer: I am paid by the carrier, I do not charge a fee, and your premium is the same with me or without me. Request a quote and you will see the price before anything else.

Broker, agent, navigator, call center: who is who

• Broker or independent agent: licensed by the state, contracted with multiple carriers, paid by commission. Can quote marketplace plans and private plans side by side.
• Captive agent: licensed, but represents one carrier. Can only show you that company's plans.
• Navigator or assister: funded by grants to help people enroll on the marketplace. Not licensed to sell, not paid commission, and cannot quote private plans.
• Carrier call center: employees of one insurance company. Helpful for that company's plans only.

None of these is bad. They just answer different questions. If you want to know whether a private PPO or a subsidized marketplace plan is cheaper for you, only an independent broker can quote both.

The conflict of interest, honestly

Commissions differ between products, so a broker could be tempted to steer you toward whatever pays more. Marketplace commissions are typically modest, and some private and supplemental products pay more. You should know that going in. The protection is simple: ask the broker to show you the marketplace price with any subsidy next to the private quote, in writing, and to tell you which one they would pick if they were you and why. A broker who will only show you one side is selling, not advising.

What a good broker actually does for the commission

1. Checks your doctors and hospitals against each plan's network before you enroll, so you are not surprised in January.
2. Runs the subsidy math on your real household income, including self-employment income and expenses.
3. Quotes private plans alongside the marketplace and explains underwriting plainly, including when you would be declined.
4. Handles the application and any follow-up questions from the carrier.
5. Stays on the file. When a claim is denied, a bill looks wrong or your income changes mid-year, you call a person who knows your situation instead of a hold queue.

Questions to ask any broker

• Are you licensed in my state, and what is your National Producer Number?
• Which carriers are you contracted with, and which ones can you not show me?
• Do you charge any fee beyond the carrier's commission?
• Will you show me the marketplace plan and the private plan side by side?
• Who do I call after I enroll if something goes wrong?

A broker who answers all five without hesitating is probably one you can work with. My license covers 31 states, including Florida, where I am based, and my NPN is 21032307.

When you do not need a broker

If you qualify for Medicaid, apply directly through your state; a broker cannot help with that and is not paid for it. If your employer offers a good plan with a large contribution, take it. And if you are certain the marketplace is the right route and comfortable with the website, you can enroll yourself and the price is the same. Brokers earn their keep when the answer is not obvious: self-employed income, a condition that complicates underwriting, a family split across state lines, or simply wanting a second set of eyes before you commit for a year.