Do Health Insurance Brokers Cost Money? How They're Paid

One of the most common questions people ask before calling a broker is simple: "What is this going to cost me?" For most health insurance shoppers, the answer is nothing. Brokers and agents are paid by insurance companies, and the price you pay for a plan is the same whether you use one or not. Still, it is smart to understand exactly how that works, where conflicts of interest can show up, and what to ask so you get honest help.

Key takeaways

• For Marketplace, individual, and Medicare plans, a broker's help is free to you. The insurer pays a commission.
• Your premium does not go down if you skip the broker. Rates are filed with regulators and are the same in every channel.
• A small number of brokers charge separate fees, mostly for business clients. Fees must be disclosed.
• Commissions can vary by carrier and product, so ask what the broker represents and how they are paid.
• Free, neutral help also exists through Marketplace Navigators and Medicare's SHIP program.

How health insurance brokers get paid

When you enroll in a plan through a licensed broker or agent, the insurance company pays that person a commission. The commission is built into the carrier's overall pricing, which is reviewed by state regulators (and by CMS for Medicare plans). Because the rate is fixed before anyone sells the plan, the premium does not change based on who helps you enroll.

There are two common commission structures:

• A flat amount per enrollment. This is common for Medicare Advantage and Part D plans. CMS sets the maximum a plan can pay for these enrollments.
• A percentage of premium. This is more common for Medigap and some individual and group plans. The percentage is set by the carrier.

Most arrangements also include a smaller renewal commission for each year you keep the plan. That gives the broker a reason to keep you happy long after the sale.

Why your price stays the same without a broker

It is natural to assume that cutting out the middle person saves money. In health insurance, it does not. Carriers file one rate for each plan, and they are not allowed to offer a discount for buying direct. If you enroll on HealthCare.gov, on a state marketplace, or on the carrier's own website, you pay the same premium the broker would have quoted you.

The practical result: using a broker gets you a second set of eyes, help with paperwork, and a person to call later, at no added cost.

When brokers do charge fees

There are a few situations where money changes hands:

• Business and group benefits. Some brokers who serve employers work on a fee basis instead of commissions, especially for larger companies. This is disclosed in a written agreement with the employer, not the employees.
• Consulting services. A broker may charge for services that are separate from selling a plan, such as reviewing a complicated claims dispute.
• State-permitted fees. A few states allow agents to charge individual clients a fee if it is disclosed and agreed to in writing. This is uncommon.

For Medicare Advantage and Part D plans, agent compensation comes from the plan itself. If anyone asks you to pay a fee to enroll in one of those plans, stop and contact your state Department of Insurance.

Free help options compared

You have several ways to get help for free. Each one has strengths.

Navigators and SHIP counselors are valuable if you want a neutral explanation with no sales involved. A broker is valuable if you want someone to make a recommendation and handle enrollment. Many people use both. To understand the difference between agent types, see Medicare agent vs. broker.

Conflicts of interest to watch for

Being paid by carriers is normal, but it does create incentives you should know about.

Commission differences between carriers

Two carriers may pay different amounts for similar plans. For Medicare Advantage and Part D, CMS limits the maximum, which narrows the gap. For Medigap and individual plans, commissions are set by each carrier and can vary more.

Plans that pay no commission

Some carriers pay reduced or zero commissions on certain plans or during certain enrollment periods. A broker may not show those plans, not because they are bad for you, but because the broker would work for free. Ask: "Are there plans in my area you don't sell?"

Product type

A broker might earn more from one type of product than another. For example, Medigap commissions are structured differently from Medicare Advantage commissions. A good broker explains both types and lets your needs drive the choice.

Bonuses and contests

Some carriers run sales incentives. Regulators restrict these, especially for Medicare plans, but it is fair to ask whether the broker receives anything beyond standard commissions.

None of these mean a broker is acting against you. They mean you should ask questions and expect straight answers.

Questions that reveal how a broker is paid

You do not need to be confrontational. These questions are normal, and experienced brokers hear them often:

1. Which insurance companies are you appointed with?
2. Are there carriers or plans available in my area that you cannot sell?
3. Do you earn a commission on every plan you show me? Does it differ by carrier?
4. Do you sell both Medicare Advantage and Medigap (or both on- and off-Marketplace plans)?
5. Is there any fee I would pay you directly? If so, can I see it in writing?
6. Will you help me at renewal time and if I have a claims problem?

A broker who answers clearly and without hesitation is showing you how they will treat you after the sale. For a longer list, read questions to ask a health insurance agent.

How to check that a broker is legitimate

Because the service is free, it is easy to skip verification. Do not. A few minutes of checking protects you from fake "agents" who exist mainly to collect personal information.

• Ask for the broker's full name and National Producer Number (NPN).
• Verify the NPN at NIPR, the national licensing database used by state regulators.
• Search your state Department of Insurance website for license status and complaint history.
• For Marketplace plans, confirm the broker has completed the current year's Marketplace registration. They must get your consent before working on your application.
• For Medicare plans, confirm they have completed the current year's certification.

You can browse licensed agents by state through our directories for health insurance agents and Medicare agents, including state pages such as Texas.

Is a broker worth it if the help is free?

A broker cannot lower the price of a specific plan. What a broker can do is help you avoid an expensive mistake, such as picking a plan that does not cover your doctor or your prescriptions, missing an enrollment deadline, or overlooking a subsidy you qualify for. During ACA open enrollment and Medicare's Annual Enrollment Period, that kind of help is often the difference between a plan that works and one you regret in February.

Because there is no fee, the main cost of using a broker is the time it takes to have a conversation. The main risk is choosing one who represents too few carriers. Ask the questions above, and that risk drops a lot.

Talk to a licensed agent for free

Health insurance brokers and agents are paid by the insurance carriers, so you pay nothing extra for their help and your premium stays the same. A licensed agent can compare plans from the carriers they represent, check your doctors and medications, explain subsidies or enrollment windows, and stay available after you enroll. If you are ready for that kind of help, you can find a licensed health insurance agent near you at no cost.