For employers who have asked why costs keep rising
Brokers are paid by the carriers and vendors they're supposed to be negotiating against
Compensation grows when costs grow
Nobody is held to a performance standard
When results don't come, the answer is always the same — switch brokers, switch carriers — and the cycle resets with the same compensation architecture underneath
If your costs rose at renewal last year, did your broker's compensation also rise?
If your plan underperforms this year, does your broker forfeit anything?
In a fully insured arrangement, broker compensation is calculated as a percentage of your total premium. The math is straightforward: when your premium increases, broker compensation increases with it — automatically, without any additional work required. The average employer never sees this number. It isn't invoiced separately. It lives inside the premium, paid by the carrier on your behalf, from money you provided.
Beyond the percentage, fully insured brokers operate inside a carrier relationship that creates its own structural pressures. Volume requirements and production agreements mean a broker's ability to maintain their business can depend on how much they place — and keep — with certain carriers. That reality exists whether or not any individual broker is conscious of it.
Employers on fully insured plans are also frequently steered away from alternative funding models. Sometimes this is genuine uncertainty about whether the alternative is right for them. The question worth asking is: who benefits most if you stay where you are?
Does your broker receive a percentage of your premium?
Did their compensation increase at your last renewal?
Has the conversation about alternative funding ever come up — and who steered it, and where did it go?
Level funded plans sit between fully insured and self funded — predictable monthly costs with the potential for surplus return at year end. For many employers, it's the right move. But the broker compensation model that typically comes with it carries much of the same structure as fully insured: advisory fees, carrier volume incentives, and production bonuses don't disappear when the funding model changes.
The accountability question remains the same: is your broker's compensation tied to your outcomes, or to the volume of business they place and retain with carrier and vendor partners?
The surplus your plan generates at year end is a return of your money — claims funding you paid that wasn't
used. The question of who participates in that, how much, and whether it was disclosed to you is worth understanding before the next renewal arrives.
Do you know how your broker is compensated on your level funded plan?
Does your broker participate in your surplus — and was that disclosed?
If your renewal comes back higher than last year, does your broker's compensation change?
Self funded arrangements give employers direct access to claims data, more flexibility in plan design, and the potential for significant cost control. They also involve more vendors, more contracts, and more compensation arrangements — most of which run between the broker or agency and the vendor, not between the vendor and you.
Stop-loss carriers embed margins in their premium. Pharmacy benefit managers collect fees on fills and retain portions of rebates. TPAs charge marketing fees and in most arrangements take a percentage of savings that is never independently audited. Vendors providing high-cost specialty programs operate on fee structures that can reduce the net savings delivered to the employer without those reductions appearing on any document the employer receives.
None of these arrangements are necessarily disclosed to you. The agreements aren't yours to see. The compensation isn't invoiced to you directly. It flows through a structure you didn't design and weren't party to. This doesn't mean your plan isn't working. It means you likely don't have full visibility into what it's actually costing to run it — and who is being paid from that cost.
Do you have full visibility into every compensation arrangement between your broker and your vendors?
Has anyone ever conducted an independent audit of your stop-loss, PBM, or TPA contracts?
Do you know whether any of your plan's claimed savings were reduced by undisclosed fees before they reached you?
NeXT is a compensation model built on one principle: the person that pays you is who you work for. We removed carrier commissions entirely. No percentage of premium. No volume bonuses. No vendor arrangements that aren't disclosed to you. Our compensation is contractually defined, paid directly by the employer, and tied to what actually happens to your plan cost.
We charge a flat fee depending on your engagement level. That fee covers the full scope of brokerage services. We then participate in a small percentage of hard savings and a small percentage of any surplus generated. If your total all-in plan cost increases at renewal, that participation is forfeited. We don't get a free pass.
The PEPM replaces embedded compensation. In most cases it does not represent an additional cost — it represents a visible one.
For the first time, you can work with a broker whose compensation is built around the same outcome you want — a plan that costs less, performs better, and actually serves the people on it.
The Benefit Doctor · NeXT Performance Model · Confidential