What a broker of record letter does

What stays, and what changes

Stays the same: the insurer, the plan, the rates, the network, the renewal date, and your employees’ ID cards.

Changes: who services the plan, who receives the insurer’s reports and renewal, and who is paid the commission already built into your rates.

The letter does not rewrite the policy. It names the broker.

The stub period, until the next renewal

Between the broker-of-record transfer and the next renewal, the commission schedule already in the carrier contract applies, and the employer’s premium does not change. That stretch is the stub period. Switching does not add a separate engagement fee. The commission is already in the rates. The letter moves it.

From the renewal forward, pay is still carrier commission, often set in the rates the carrier files with the state. Every dollar paid on the contract is disclosed in writing, in dollars and per employee, before the plan goes through, for the current plan and every option quoted. How I’m paid.

Since the Consolidated Appropriations Act, 2021, a broker or consultant to a group health plan who expects $1,000 or more in direct or indirect pay has to disclose it to the plan in writing, reasonably in advance. It applies at any plan size. The Department of Labor says that with a broker-of-record letter, the arrangement starts when the letter goes to the carrier or the group application goes in, whichever is earlier (FAB 2021-03, Q6).

Timing: 150 days, or inside 90

1. Any time of year. Approve the engagement letter and sign the broker-of-record letter. You can also revoke the letter.
2. 150 days before renewal. The latest start for the coming cycle. The transfer takes about a month, and a claims report can take another 30 days.
3. Inside 90 days. Servicing can still move now. This renewal is worked only when the census, claims, and renewal are in hand more than 60 days before it. Otherwise it is handled as it stands, and the full strategy starts with the next renewal.
4. The next roughly 30 days. The insurer confirms the transfer. Servicing starts that day. The Plan Report follows a signed broker-of-record letter and the transfer, usually about a month.

The working calendar is on the 120/90/60/45 day renewal calendar. The full handoff is on how switching brokers works.

The Renewal Control Plan, named accurately

The work is one seven-step process: Step 1 Introduction through Step 7 All year, every year. The next cycle starts 150 days before renewal at the latest.

For employers with 100 or more employees, the full engagement, Steps 2 to 7, is the Renewal Control Plan. The Plan Report is its first deliverable. Employers with 50 to 99 employees get the same seven steps. Step 0, a self-run Renewal Benchmark Check or a Form 5500 public-filing read, can happen beforehand. It is optional, and it is not an eighth step.

The size guide is group health insurance for employers with 50 to 500 employees.

Where this applies

Any employer with 50 to 500 employees in Arizona, California, Colorado, Hawaii, Iowa, Michigan, Nevada, North Carolina, Oregon, and Texas. A group outside those states is invited once placement there is set up.

In Texas, you do not need a new broker to ask for your own claims history. How to get your claims report.

What does a broker of record letter do?

It is a short letter on company letterhead, approved by an officer, telling the insurer which broker represents the plan. The insurer then sends that broker the plan’s reports, billing questions, and renewal. Coverage does not move to a new policy.

What changes on the policy, and what stays the same?

The insurer, the plan, the rates, the network, the renewal date, and employee ID cards stay the same. What changes is who services the plan, who receives the insurer’s data, and who is paid the commission already built into the rates.

What is the stub-period commission rule?

Between the broker-of-record transfer and the next renewal, the commission schedule already in the carrier contract applies, and the employer’s premium does not change. Pay is carrier commission, often set in the rates the carrier files with the state. Every dollar on the current contract and every option quoted is disclosed in writing, in dollars and per employee, before the plan goes through. How I’m paid.

What is the difference between 150 days before renewal and inside 90 days?

150 days before renewal is the latest start for the coming cycle. Inside 90 days, I can still take over servicing. This renewal is worked only if the census, claims, and renewal are in hand more than 60 days before it. Otherwise it is handled as it stands, and the full strategy starts with the next renewal.

What happens in the 30 days after the letter is signed?

The insurer processes the letter and sets the effective date, usually about a month later. Servicing starts that day: enrollment, ID cards, billing, and employee questions. The Plan Report follows a signed broker-of-record letter and the transfer, usually about a month. It is written from the carrier’s own data.

Does this apply only to large groups?

No. It is for any employer with 50 to 500 employees in Arizona, California, Colorado, Hawaii, Iowa, Michigan, Nevada, North Carolina, Oregon, and Texas. For 100 or more employees, Steps 2 to 7 are the Renewal Control Plan, and the Plan Report is its first deliverable. Employers with 50 to 99 employees get the same seven steps. Groups outside those states are invited once placement there is set up.

I built and sold a health insurance agency: grew it to 60 agents in about 3 years, then sold it. Licensed insurance agent since 2014: Texas license 2501238, NPN 17369817.