How Much Do Health Insurance Brokers Make Per Policy?

One of the questions on the mind of most health insurance policyholders is how much health insurance brokers make per policy. Before taking your cove, you may not be sure if you will be paying the brokerage fee alongside your premium or if the broker will bill you separately for his brokerage service charges.
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We are here to unravel this for you. Your health insurance broker will not charge you an extra fee to cover his service fees. His charges are already included in the policy amount your health insurance cover provider will quote for you. Here is how it works.

Broker of Record

A broker or health insurance agent will probably approach you to discuss the options available for you. When you decide on the kind of cover to take, you may work with a particular broker or agent to help you understand and sign up for it. The person you choose becomes your broker of records, acting as the link between you and the health cover provider.

You will then sign a letter of broker of records indicating that you have accepted to work with this broker. It will be the first contractual step between the broker and the health insurance providers and the broker and form the basis of his payment.


Brokers earn a commission for every new policy they help a client sign. The commission is not levied on the client directly. Although the regulations differ from state to state, most insurance companies follow the 80/20 rule, with 80% of the policy amount going to your medical cover and 20% for their administrative costs, including paying brokers and agents.

The 80/20 rule is a requirement under the Affordable Care Act. It ensures that the highest chunk of your insurance premium goes towards your health insurance, limiting the amount your insurance provider can use for other costs such as marketing, overhead, and broker commissions.

Captive or Non-Captive? 

Your broker may be working for an insurance company or agency like Healthcare Solutions Team. In this case, you are a captive agent or broker, and you can tap from the agency’s infrastructure to gain new clients. For instance, the company may carry out a marketing campaign for a health insurance product. You can get leads from this campaign if you receive calls from new clients interested in the product.

As a captive agent, you will also have access to the company offices and a working space paid for and furnished by the company. The company or agency you work with may offer you an initial salary in addition to the commissions you earn on each policy. You may also get bonuses together with the other employees of the insurance or brokerage firm.

Captive agents interact with more experienced agents who guide them on how to net clients to increase their income. They also enjoy some credibility since clients may trust them faster than non-captive agents. This makes it easier for them to get more clients.

Captive clients mostly rely on clients who reach out to the company or insurance brokerage firm they are working for. They are paid between 5%-10% commission of the value of the policy for each new health insurance policy, where they act as brokers of records.

However, working as a captive agent limits you to selling health insurance policies from one company only. This may limit the number of clients you can get since some may not want the products from the firm you work for.

As a captive agent, you also have to follow company or agency policies. If they introduce new products, you have to market them even though reception may not be positive. The company or agency firm may also decide to withdraw a product that your clients may like.

Non-captive agents work independently. They meet the cost of setting up and running their offices and paying any staff they may hire. They are also entirely responsible for marketing themselves and the products they are selling to clients. Most of the time, they get clients from their outreach visits where they go out to meet the public in public places or offices.

A non-captive or independent broker earns a higher commission. They may get about 15% of the value of the health policy. They also get a commission for renewed policies, but this is paid at a lower percentage. This means they have to market health insurance products aggressively since what they earn depends on the number of policies they sell.

Even though the independent agent does not get benefits such as a salary, bonuses, and office space, they may make more than the captive agent may since they are at liberty to sell policies from different companies. That way, they can get more clients since they will sell what the client prefers.

Independent agents can sell fast-moving policies from one company and switch to another product when the product’s popularity drops or if the company changes its policies regarding the product. This means the agents will have higher chances of getting more clients since they can choose the products to market.

Does Your Locality Matter?

Commissions for health insurance depend on premiums. That tells you that a broker will earn a higher commission for a high premium and a lower commission for a lower policy. Insurance premiums vary from one region to the other. You should therefore consider your locality and the premiums paid for health insurance. This will help you determine if you can make enough money selling health insurance policies in the area.

However, insurance firms are keen on ensuring brokers receive reasonable compensation even when they sign in clients paying a low premium. They also want to ensure large businesses that can pay high premiums for their employees, small businesses that can afford smaller premiums, and individuals with limited budgets receive the same level of services from insurance brokers.

They ensure this is possible by grading premiums. Brokers receive a large percentage in commissions for the first dollars, and the percentage reduces as the premiums paid increase. That way, large organizations, small businesses, and individual clients will get a similar quality of services.

Does Retention Matter?

A broker may sign employees from a small company and continue to work with the company as it expands. The company may grow to a level where their insurance needs expand, calling for a change in insurance plans.

Work at retaining your existing clients since you need less effort to do so than to gain a new client. Besides, as long as you retain the client, you may continue earning your monthly commissions on the premiums they pay.

This shows you the importance of continually engaging and retaining a client. Losing a client means losing your commissions since you are paid a percentage of the premiums paid by clients that sign you up as a broker of records.

Retaining a new client may require less effort than gaining a new one. Even though you may get a better commission from a new client, your old clients will ensure the continued flow of your monthly income. The commission from an existing client may be low, but so are the efforts you need to retain that client.

How Do You Benefit from Working with an Insurance Broker?

An insurance broker is always updated on the new health insurance products that can suit you or your business. If you are working with one, you will receive this information as soon as it is available.

The broker will not charge you an extra fee for updating you on appropriate health insurance products you can take advantage of. This will take away the burden of researching and navigating the wide health insurance industry to identify the best plan for you and your business.

Bottom Line

Whether you buy your policy from a broker or directly from an insurance company, you will pay the same amount for your premiums. The insurance company pays the broker an agreed percentage of the premiums you pay.

However, if you work with an insurance agent or broker, you will have constant updates on new plans to suit you or your company. Legally, insurance companies are required to use 80% of your premiums for your health insurance cover and 20% to meet their administrative costs such as paying brokers.

At Healthcare Solutions Team, we offer customized insurance policies that minimize cost and maximize coverage. As the insurance industry becomes highly automated, our agents retain the human touch with our clients to break down for them the complexities associated with some health insurance policies.

With our agents and Industry News, we are ready to guide you through identifying and signing up for health insurance that meets your needs. Contact us for all your health insurance needs.

We offer individual, family, senior or Medicare products, and group plans for firms of all sizes. Whatever you need we will link you up with one of the nation’s top providers to get an affordable insurance plan. We have more than 1,000 plans from about 50 leading insurance coverage firms. We also help clients get tailor-made plans to fill gaps in conventional plans like Medicare.

Healthcare Solutions Team is a wholly-owned subsidiary of the National General Insurance Group and Allstate Insurance Company.