It is probably safe to say that most employees don’t understand the finer details of their group benefits. They know who their health insurance companies and doctors are, but beyond that, benefits pretty much remain a mystery. That being the case, it would be interesting to see how many people would be surprised to learn about the five key players required to make benefits available to them.
Enrolling in a group health insurance plan establishes a relationship that goes beyond subscriber and insurance carrier. There are many other players involved. And outside of private sector players, the government at both the state and federal levels are involved.
Government interests aside, here are the five key players in the group benefits game:
1. Top-Level Carrier
The originator of all benefits packages are top-level carriers. These are insurance companies that write health insurance policies, dental and vision policies, prescription plans, and ancillary benefits like retirement plans, long-term disability insurance, accident insurance, etc. There are literally hundreds of top-level carriers active in the U.S.
It is interesting to note that these carriers are also insured themselves. They are covered through reinsurance – which is essentially insurance for insurance companies.
2. General Agency
The general agency is next in line. Think of a general agency as a broker for brokers. In other words, an agency represents top-level carriers as they sell products to brokers and their agents. BenefitMall, a Dallas company that got its start in payroll, now does business as a general agency. They represent more than a hundred carriers to thousands of brokers and agents.
3. Benefits Broker
Third in line are brokers and independent agents. A broker is a licensed individual that operates a brokerage business. They may work alone or with independent agents brought on as contractors. The broker-agent relationship is a lot like similar relationships in consumer-level insurance, real estate, and the travel industry.
A benefit broker’s primary responsibility is to help employers put together the best benefits packages they can. They have to be well-versed in all the benefits their general agencies and carriers offer. Suffice it to say there is a lot to know.
4. Benefits Manager
Next up is the benefits manager. A benefits manager is a third-party entity that acts as a go-between for group benefit plans on one end and service providers on the other. A good example is the pharmacy benefit manager. Also known as a PBM, the pharmacy benefit manager negotiates prices between insurance plans and pharmaceutical companies. The prices they negotiate directly impact what you pay for prescription drugs at the pharmacy.
Unfortunately, PBMs get paid mostly by pharmaceutical companies and healthcare groups. Their pay is commensurate with the amount of money they save for those companies. You can probably figure out for yourself how that impacts your healthcare costs.
The last player is the one people are most familiar with: the employer. Group benefits are generally offered through employers who work with brokers or agents to put together packages. A given company may have someone in HR assigned the task of managing group benefits at the company level, or that task might be left to the broker. In either case, HR becomes the first point of contact between employee and carrier.
There are a lot of people involved in making sure you have access to employee benefits. All play a role in determining what your benefits are, how you use them, and how much you pay for them. And now you know. Group benefits are not as simple as they might seem.