Group Health Insurance Commissions Verses Individual?

[timamr]

I understand individual health insurance commissions but how does it compare to say someone that sales group policies to small businesses? Is the commission levels the same?

For example: Say I sell 10 individual policies to 10 different people and make say 10% commission off of EACH. Now, what happens if I sold a GROUP policy to a group of 10, does group pay the same 10% per person?

 

[Dave020]

I have to caveat before I start that this question is going to have state-specific variations and I can only speak for CA (although I expect most states are similar).

Small group pays either a flat rate per enrollee or (more common) a % commission on the total group premium. Our average per group in CA is about 6-7% on the group. Group commissions will reduce in % at certain premium breakpoints. For example, group hits $30k in premiums during the year then the commission rated for the remainder of the plan year may drop to day 5% something like that.

Overall 10 people (as your example) on a group plan may pay slightly less % commission but often you make more because the group plan premiums are higher than lower-cost or HDHP individual plans.

 

[isstoolbox]

In Tennessee...BCBST pays around $35 Per application...if it is a group policy. It doesn't matter if it is just an employee or a employee with a spouse and 5 children..It's a flat $35...as compared to 14% per application with their individual products..if you are on their top tier contracts..It is different with every company and every state..as far as i can tell

 

[Ann H]

In AZ the commissions are lower (they were also lower before PPACA). Group commissions run 4.5% to 6% or else about $23-$27 PEPM (per employee per month). Individual commissions are as high as 10% if the commission is level, but some are higher in the first year and lower in years 2+. These are for standard broker contracts - there are higher commissions & bonuses for more volume of course.

 

[dgoldenz]

In AZ the commissions are lower (they were also lower before PPACA). Group commissions run 4.5% to 6% or else about $23-$27 PEPM (per employee per month). Individual commissions are as high as 10% if the commission is level, but some are higher in the first year and lower in years 2+. These are for standard broker contracts - there are higher commissions & bonuses for more volume of course.

About the same for VA/MD/DC. Aetna pays $34 PCPM on 4-50 size groups and Anthem pays $40 PCPM on 2-14 and $30 PCPM on 15-50. CareFirst pays $21-27 PCPM depending on the product, but vision/dental can add another ~$8 PCPM to that.

 

[timamr]

Thanks for all of you guys' input. Seems like group policies are a waste of time, unless I am going for a group of 30+ or more--and even then I am sure they are a much longer sales process than an individual plan (unless I am missing something). I think I will stick to individual coverage, which is what I know anyways.

 

[dgoldenz]

Thanks for all of you guys' input. Seems like group policies are a waste of time, unless I am going for a group of 30+ or more--and even then I am sure they are a much longer sales process than an individual plan (unless I am missing something). I think I will stick to individual coverage, which is what I know anyways.

A group of 15 employees at $35 PCPM would pay ~$6k/year in level commissions....I wouldn't say that is a waste of time.

 

[Ann H]

I agree with dgoldenz. And due to HIPAA laws, group is guaranteed issue. So you don't have to worry about apps being declined. You just have to worry about what the rate will be, depending on the demographics and known medical conditions.

 

[timamr]

Well, since you put it that way Dgoldenz, I stand corrected

And Ann, good point about group being guaranteed issue as well.

 

[Cory]

I think everyone has answered specific commission questions, but I'd like to mention the benefit of groups. Yes... the commissions can be lower, but they seem to require less maintenance and do stay on the books longer. AND... you still get the opportunity to write other business to employees. I've received referrals from business owners that had group policies that are still on the books and written individual work. There are pros/cons of individuals/groups that should be explained as far as underwriting, costs, riders, available options and ancillary benefits. Just my two cents but I have to say that I go either way on individual or group... whatever the group wants.