Broker pay, explained
If you're not paying a broker fee, you're still paying.
Premium-embedded pay is anything your broker is paid through your premium rather than billed to you — base commission plus bonuses, overrides, and other carrier payments. Disclosure rules call it indirect compensation. The carrier writes the check, but the money is already coming out of your budget. You just don't see the number.
The “free broker” myth
“No broker fee” doesn't mean no cost.
When a broker is paid through commissions, those dollars are priced into the premium your carrier quotes — the same premium you pay every month. There's no separate line item, so it's easy to assume the service is free. It isn't. You're paying for it the same way you always have; the difference is whether you can see the amount and put it in context.
What you pay
Your premium
A single monthly number to the carrier.
What's inside it
Base commission + bonuses
Baked into the rate before you ever see it.
What you usually see
$0 broker invoice
No billed fee — so the cost goes unnoticed.
Commissions on a fully-insured medical plan commonly run a few percent of premium — real money that rarely appears as a number you can question.
Why the structure matters
Some of that pay can pull in a direction that isn't yours.
On most insured lines, all broker pay is carrier-paid; the question is how much is base commission and how much is bonuses.
- Base commission
- The carrier's standard commission to the broker, a percentage of premium. Paid by the carrier, funded by your premium.
- Bonuses & other
- Overrides, bonuses, and other carrier payments, often tied to the broker's whole book. Paid by the carrier, funded by your premium.
Not all broker pay is equal. Override and bonus payments are often tied to the total business a broker places with a carrier across their whole book — not your plan specifically. That can create an incentive to steer clients toward whichever carrier helps the broker hit a volume target, regardless of whether it's the best fit for you.
“Free” isn’t free.
Commissions and overrides are priced into the premium you already pay. There’s no separate invoice, so the cost is easy to miss — and hard to negotiate when you can’t see the number.
Overrides can pull against you.
Bonuses are often tied to the total volume a broker places with a carrier across their whole book — not your plan. That can reward steering toward the carrier that helps them hit a threshold, rather than the one that fits you best.
A “yes” isn’t a number.
The CAA requires brokers to disclose pay of $1,000 or more, but “indirect compensation: yes” with no dollar figure tells you little. The amount is what lets you judge whether it’s reasonable.
What a real disclosure looks like
A number, not a checkbox.
The Consolidated Appropriations Act requires brokers to disclose compensation of $1,000 or more. But a disclosure that just reads “indirect compensation: yes” satisfies the box without telling you anything useful. A disclosure you can act on names the dollar amount — billed fees and premium-embedded pay alike — so you can judge it against what your peers pay.
Example — total broker economics
$347,000
Any billed fee plus base commission and bonuses, stated as one number you can benchmark — instead of a “yes” with no figure attached.
See your broker's full compensation — and whether the number is normal.
Get your benchmark →Why peer figures vary so much
Every figure is exactly what the company filed with the Department of Labor. Figures vary widely because companies run different amounts of their benefits through insured contracts, and some pay their broker mostly in ways Form 5500 doesn't capture (a fee from company funds, or the medical advisor fee on a self-funded plan). That's why we compare on the median rather than the highs and lows, show which lines each company discloses, and compare commission as a share of premium, which isn't affected by how many lines a company insures. Union and multi-employer benefit funds are excluded from employer peer groups.