Broker Compensation from Section 125 Plans
- Thread starter stephjt
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- 1,459
The latter, some companies will pay you a % of fees collected (10% to 25%),a flat fee like $50 for set-up, or some don't compensate you at all. You don't make money selling a 125 plan, it's a value added service to get at the other business. Quite frankly, the time I spend servicing them far outweighs any compensation I get from them.
Cafeteria plans specifically section 125's are typical group plans with non-discriminatory provisions built-in. Whenevery you sell a group health plan the carrier will pay a precentage of premium, just like an individual plan, however the commission structure is much lower (ie) for instance 5 to 50 cover lives 7%, 50 to 100 coverd lives 5%, and so on.
Understand that premium rates are going to run in the thousands per month, you should still come away with a nice commission. Plus group clients are gauranteed insurability unlike individual, it's always worth it to go after group accounts.
Understand that premium rates are going to run in the thousands per month, you should still come away with a nice commission. Plus group clients are gauranteed insurability unlike individual, it's always worth it to go after group accounts.
- 8,707
You might want to reread the original question. The OP was not asking about commission on an insurance product but on money that flows through a section 125 plan into reimbursment accounts.
- 393
if your setting up a group w/ a 125 plan, and you do it right the $$ that flows through the 125 should be going straight into some policy that you are the agent on, therefore getting your compensation.
- 8,707
I understand what your saying but I believe the OP was asking about accounts for things like medical reiumbusment, dependent child care...FSA type things.
- 393
Better have a good TPA partner in that case! Or negotiate a 5% charge on all the money going through the 125 lmao.....I write up either a very simple 125 (POP ONLY) with an HSA contribution for those who can get their heads around it or I use a more comprehensive tpa so I don't have to mess with it but take a cut of the monthly charge per EE that enrolls from the tpa.
Oh I understood the question, don't think you understood the answer, you don't make money off of Section 125 plans, it's a pre tax advantage, and a selling strategy for agents. when you'r offering other value added benefits like 401, retirement, ect (I go through Jackson National Life, and ING) you will get a percentage based on your production level. So again you're not making money on the cafeteria plan only the medical, supplemental, and retirement plans. Maybe I wasn't specific enough, hope that helps.
- 166
Many third party administrators do pay commissions when fees are involved: Flexible Spending, HSA, etc. The commission is fairly small compared to what could be made on the insurance end.
The primary benefit in my business is that a section 125 plan creates compliance issues for the employer. The employer needs to document employee elections for every open enrollment. This requires individual meetings with each employee.
Individual meetings with each employee translate into additional insurance purchased by the employees - which is where the real money is made.
The primary benefit in my business is that a section 125 plan creates compliance issues for the employer. The employer needs to document employee elections for every open enrollment. This requires individual meetings with each employee.
Individual meetings with each employee translate into additional insurance purchased by the employees - which is where the real money is made.
Broker007
Expert
Good advice.
