How to Evaluate Your Health Benefits Broker: A Guide for Plan Sponsors
How to Evaluate Your Health Benefits Broker: A Guide for Plan Sponsors
For many employers, the benefits broker is the most influential outside voice in the health plan. Brokers help shape plan design, bring vendors to the table, negotiate renewals, and often advise on strategy.
That influence is exactly why the relationship deserves periodic, structured review. This guide covers what to evaluate, how compensation disclosure works, how often to look, and what to document.
Why Evaluate Your Broker at All?
Many broker relationships run for years without a formal review. Some of those relationships are excellent. But without an evaluation, the committee has no clear way to show that.
Health benefits are seeing the same pressures retirement plans faced over the last fifteen years: more disclosure, more attention to fees and conflicts, and a growing expectation that decisions are supported by a documented process. A periodic broker evaluation is one of the clearest ways to meet that expectation.
What to Evaluate
A useful broker evaluation looks beyond renewal results. Consider:
Strategy. Does the broker bring a multi-year view of your plan, or mostly manage one renewal at a time?
Market access. Does the broker bring you real alternatives, including options outside its usual vendor relationships?
Pharmacy expertise. Pharmacy is often the fastest-growing part of plan cost. Can the broker explain your PBM contract in plain terms?
Data and reporting. Do you get clear, usable reporting on claims, costs, and trends?
Compliance support. Does the broker help you meet disclosure, notice, and reporting obligations?
Service. Is the team responsive, and do your employees get help when they need it?
Understand How Your Broker Is Paid
Broker compensation can come from several places: fees paid by the employer, commissions paid by insurers, and other payments such as bonuses or incentives tied to volume or retention.
The Consolidated Appropriations Act, 2021 requires brokers and consultants serving group health plans to disclose the direct and indirect compensation they expect to receive. That gives plan sponsors a clearer view — but only if someone reads and understands the disclosure.
Questions worth asking:
What is the total compensation you expect to receive in connection with our plan, from all sources?
Do you receive any payments from vendors you recommend to us?
Are any payments tied to keeping us with a particular carrier or vendor?
Compensation from vendors isn't automatically a problem. But the committee should understand it and weigh it when considering the broker's recommendations.
Look at Conflicts, Not Just Costs
A conflict of interest is any situation where the broker's financial interest and your plan's interest could point in different directions. Common examples include vendor incentive payments, a broker's affiliation with a particular coalition or program, or a broker running the evaluation of vendors it also benefits from.
Conflicts can be managed. The first step is naming them. The second is structuring decisions so that the committee — not the conflicted party — controls the outcome.
How Often to Evaluate
Many plan sponsors review their broker relationship every three to five years, with ongoing monitoring in between. Some events justify an earlier look:
Renewal increases the broker can't clearly explain
A change in how the broker is paid
The broker's firm is acquired or merges
Key members of your service team leave
Your plan changes significantly — for example, a move to self-funding
Who Should Run the Evaluation?
It's common for brokers to run RFPs for the vendors they place. That can work well. But when the broker itself is being evaluated, or benefits from the outcome, the committee needs a process it can rely on independently.
Options include running the evaluation internally with clear criteria, or bringing in an independent party with no financial ties to the brokers or vendors involved. Either way, the goal is the same: a comparison the committee can explain and stand behind.
Document the Decision
Whatever the result, write it down. Good records include the criteria used, the firms considered, how each was scored, the compensation disclosures reviewed, and the committee's reasoning.
A decision to keep your broker after a real evaluation is a strong outcome. It shows the relationship was chosen, not just continued.
Add Cybersecurity to the Review
Broker evaluations have traditionally focused on renewals, service, and cost. There's now a good reason to add data security.
In September 2024, the Department of Labor confirmed in Compliance Assistance Release 2024-01 that its cybersecurity guidance applies to all ERISA plans, including health and welfare plans. Brokers often handle employee census files, claims reports, and other sensitive information. Ask how they protect it, who else can access it, and how quickly they would tell you about an incident.
A broker who can answer these questions clearly is showing the kind of discipline you want applied to your plan.
Signals Worth Paying Attention To
Some patterns don't prove a problem, but they do suggest the relationship deserves a closer look:
Renewals that arrive late, leaving little time to consider alternatives
The same vendors recommended year after year, with few options outside them
Compensation disclosures that are hard to read or incomplete
Reluctance to share underlying claims or pharmacy data
Strategy conversations that only happen at renewal time
Each of these is worth raising directly with the broker. The response often tells you as much as the issue itself.
A Practical Next Step
Start with the disclosure. Pull your broker's most recent compensation disclosure and read it with one question in mind: do we understand every source of payment on this page?
If the answer is no, that's the place to begin.
Culpepper RFP conducts independent health benefit broker and vendor evaluations with no financial ties to brokers, carriers, PBMs, or coalitions. If your committee is ready for a closer look, we're glad to talk through the process.
