February 12, 2024
Benefits consultants, agents or brokers are your appointed representatives with vendors and carriers. They represent your best interests in strategic planning, plan management and negotiations. But when you are looking to make a change, here is how to change benefits brokers.
Whether you are looking for advanced capabilities, or a more robust health care risk management solution, switching brokers is a simple three-step process.
Step One: Execute an Agent of Record (AOR) letter
The broker will prepare an AOR letter which will let your incumbent carriers and vendors know that you have chosen to work with them; this will be effective from the date of the letter. It authorizes your carriers to share data with your new broker so they can begin working on your behalf.
Naming a new AOR as you change benefits brokers does not impact any current rates, plan designs, carrier contracts or the administration of the plan. In fact, the change will not be noticeable to your plan members, nor will it cause any disruption to their benefits.
Step Two: Sign a Business Associate Agreement (BAA)
This agreement protects you and your members by defining the brokers obligations for the collection, use, transmission and storing of protected health information (PHI) in accordance with the Health Insurance Portability and Accountability Act (HIPAA).
Step Three: Strategize with your new consultant
Time is of the essence. Your new broker will go to work while waiting for the carriers’ acknowledgment of your AOR. The best employee benefits brokers will assign a dedicated account team which will serve as your strategists, help your HR team with administrative issues and negotiate with any markets when the time is appropriate.
How to change broker FAQs
How do I write an AOR letter?
Your new broker should make this easy for you — they will create the letter. All you will need to do is review the letter, print it on your letterhead and sign and return it to the broker. They will then forward the letter to your carriers and vendors.
Q: We’re in the middle of a lot of transition in our HR department. Should we wait?
During a transitional time in HR, you are probably concerned about causing disruption to your employees’ benefits. And you certainly don’t want to create a greater burden for yourself. The good news is, upon signing an AOR letter, a quality broker will do all the heavy lifting — making the transition as seamless as possible. Since the AOR letter doesn’t impact rates, benefits, carriers or the administration of the plan, the change will not be noticeable to your plan members, nor will it cause any disruption to their benefits.
Q: How long will it take to make this change effective?
When you change benefits brokers, your new dedicated account team should be assigned immediately upon receipt of the signed AOR letter. They begin working on your behalf right away. How long it will take for the carrier to recognize our representation of your group will depend on the carrier. Many carriers will recognize the AOR letter immediately upon receipt, but some impose a quiet period of up to 15 days, during which they will not share any information with the new consultant.
This quiet period can only be waived by the incumbent consultant. This can create issue if you are changing benefits brokers too close to your renewal date. When that happens, your new broker will be unable to directly receive important claims and renewal information, which may complicate the market analysis and negotiation process. This may put you in the position of collecting important data directly from the carrier.
As a result, changing benefits brokers should be done early in renewal cycle so your new consultant can start working on strategic objectives for you as soon as possible.
If you have any questions or want more best practices on how to change benefits brokers, don’t hesitate to reach out.