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Often, the same agent or broker handles all of a company's insurance policies, from group health to general liability. If you don't have an agent, or are searching for a new one, it's time to start looking when you have your summary plan description and pricing information in hand.
Look for strong service reputations and seek out testimonials from satisfied customers. "If you belong to a trade association, or have a network of contacts in a similar industry to yours, ask them what agents have helped them the most," says Madelyn Flannagan, vice president of research and development at the Independent Insurance Agents of America (IIAA).
"Some agents might be reluctant to work with the smallest businesses because the commissions on some products, such as HMO policies, are extremely low," says Jamie Amaral, national director of health care for the National Federation of Independent Businesses. To determine which agents or brokers specialize in small-business insurance, contact your local independent agents association, life underwriters association, or the National Association of Health Underwriters. Try to network with other small businesses in your area, to find out which insurers and agents met their needs.
Don't be shy about asking for references, and following up on them, once you've found a potential agent. Ask present and past agency customers about their experiences: Did the agent respond promptly to inquiries? Did he or she give you more than one quote, from reputable companies? If you had claims problems, did the agency step in to help you solve them?
Alternately, you can shop around based on pure price comparisons. "Go
to a broker and present your summary plan description. Ask what they recommend," Rakowski says. "They'll give you quotes from different companies, plans available, and limitations of coverage. Then go to the next broker on the list. Give them that information, and ask if there's anything you might have missed. After you've been to four or five, you'll know where the best prices are."
"If you treat it as a commodity, brokers might not be appreciative," Rakowski adds, "But you absolutely need to shop until you're satisfied."
How will you know when you've found the right agency? Not only should you look for the lowest price, you should make sure that price comes from a reputable, financially stable insurance company, one with at least an "A" rating from A.M. Best, Standard & Poor's, or other rating service. If the lowest premium quoted to you comes from an insurer with a shaky financial record, consider going with a stronger company, even if the premiums are higher.
If you're excited by your first few premium quotes, do a reality check to make sure that your final premiums will be within that range. Often, the first quote an insurer gives is based on scant information about the group, and almost never considers the health history. That's the "preliminary premium rate," and it's based purely on how many employees are in your group. Unfortunately, it's not always reflective of the final premium, because it does not consider the group's health.
"Employers see preliminary rates, and they are enticed. So they make an application, and have 20 employees fill out health questionnaires, only to have the carrier respond that based on their applications, the final quote will be a 30 percent increase from the preliminary rate. That's a hard pill to swallow," says Sue Torrey, a veteran health plan broker with Marsh Advantage America, the small-business arm of Marsh & McLennan's Seabury & Smith.
Torrey tries to avoid that disappointment by having employers fill out full applications, including employee health histories, before she even looks for a preliminary quote. "It may seem like putting the cart before the horse," she says. "But if we can supply insurers with the details they like to see before offering a final premium quote, we can avoid disappointment. It's prudent to have some kind of generic application that we can send to different companies."
Once you're ready to apply for coverage, you'll need to complete a full, detailed application. You'll need to know exactly how many employees will participate, and whether their spouses and families will require coverage. If your group is small, 25 or fewer employees, each employee may need to fill out a detailed health questionnaire with 10 to 20 questions regarding his or her health history. Each family member who will be covered needs to complete the questionnaire as well.
If your group has more than 25 employees, you might get away with a shorter application: Spreading the health risks among more people means that a less detailed — or no — individual health history is required. Some insurers require only a five-question application of each employee, while others rely upon the employer's assessment of the group's health. You'll need to provide the insurer with your wage and tax reports, too.
In some states that have passed small business group health insurance laws, businesses with 50 or fewer employees cannot be turned down for a group health plan. Other states have "open enrollment" periods for small business group health plans, where insurers must take on all small businesses that apply for health coverage during a one-month period.
"Ask your agent about state-specific details like open enrollment and medical underwriting," suggests Amaral. "You don't want to miss any details that might make the application process easier, and of course, you don't want to make a mistake that will be difficult and time-consuming to fix." Back to page 1
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