Thanks Rusty. That was a well thought-out post.Great question and I get this often. The short answer is "no." If the person is charging you a fee to enroll you in to a Medicare plan, you need to find someone else to work with.
Here is the long answer if you have a minute...
As brokers, we contract with many of the companies so that we can provide a "one stop" shop for our clients. We typically don't contract with some of the less competitive companies, because there is no reason to have the 29th least expensive company in your bag of offerings. As a broker, it's in my interest to offer you the least expensive plan, with strong benefits, and with a strong financial company. If I don't recommend the least expensive, I better have a reason for why I recommended something different. It's in my interest to educate you on why, because if I signed you up for one of the most expensive plans, the next broker you talk to would be happy to help you find a lower rate with another company. I lose a client and potentially have a client who is not pleased with my service. People tend to share a "bad" experience more so than a "good" experience.
I need to educate you on why we went with a particular company and/or why we didn't go with another company. Here is an example. Say a new company in the market might be really low balling their entry premium, only to blow up in premiums a year or two later. Brokers want to protect you against that possibility. They don't want to expose a client to that. That leads to a client who might not be happy. Happy clients refer people, which is the best and least expensive ways for us to get new clients.
As for how we are paid, we are compensated by the company the client chooses. The amount we are paid is built into the premium the client pays and most companies pay us a similar amount. The company will either pay the broker that portion or simply keep it as part of their profit. The insurance company considers that portion part of their marketing expense.
Here is a situation we face often. Someone take 1-2 hours of time while you run rates, educate them on how Medicare works, even show them how they can save money by using a company the individual did not consider. Individual wants to time to think about it, which is understandable. The broker calls them back only to find out they have already enrolled with somebody from the company the broker recommended. I think this comes from the thought that people believe brokers are like salaried employees of the company. That is not the case, brokers are 1099 contractors. Brokers are only paid when you enroll through them.
The company would LOVE you to get rates from a broker, then call them direct to enroll. The broker is out time and money in educating the individual. The company is happy because they don't have to pay the broker for the work he/she did.
Here are two places you lose out by not using a broker:
1 - Saving you time: Most brokers use some sort of quoting software that will compare all the plans (up to 35 different companies in one place). That saves you time and effort of calling around shopping. It also helps later when you get a rate increase. You can call your broker and they can shop your rate again at no charge.
2 - No one from your direct company will ever call to tell you another company has a better deal. They want you to stay with them and keep paying the higher premiums. A broker will reach out to you. They are trying to protect their business by making sure the client is still getting the lowest cost possible.
2.5 - You have one person to call with questions.
Did I mention it doesn't cost you anything to work with a broker?
Thanks for reading this and I hope it helps you get a better understanding of the benefits of working with a broker. I hope this doesn't sound like I am complaining because I love this type of work. It's rewarding to help someone free up money in their budget, but still maintaining the same coverage they had. Like everyone else, you like the opportunity to share what it's like from your side once in a while.
It's very frustrating when I speak with someone, spend time explaining Medicare and Medicare Supplements, and help them find the best rate with the best company, only to have them go directly to the company to enroll. It's the customers choice and I respect that. I obviously don't do a good enough job explaining the value that I provide the customer. I also understand that people are hesitant to work with someone that they don't know versus calling a company directly to enroll. However, when a customer does this they lose out on the value that I provide to them. I strongly recommend that anyone looking for Medicare Supplements for themselves or loved ones contact a Medicare Supplement Broker and sign up through them. Quick note: I am an independent agent and work for an insurance brokerage firm. Therefore, you can view my opinion as biased. However, please keep in mind that my job depends on the satisfaction of the people that I help. A good percentage of my monthly sales come directly from referrals of happy customers.
Are there bad brokers out there? Probably. Mine isn't. Sounds like Rusty's isn't either.