Choosing a Benefits Broker: Licenses, Pay and Questions to Ask

How to check a benefits broker's license, understand how they are paid and what federal law requires them to disclose, and compare advisors fairly.

Web Health Benefits · Last reviewed October 26, 2026 · 6 min read

Most small employers don't buy health coverage alone. An insurance agent, broker or benefits consultant often helps compare plans, handle enrollment and answer employees' questions. A good advisor can save you a lot of time. The wrong one can steer you toward coverage that suits their compensation more than your business, or, at worst, toward an arrangement that can't pay claims.

This guide explains what these advisors do, how to check a license, how they are paid and what federal law requires them to disclose, and how to run a fair comparison. It names no firms and ranks no one. It is general information, not legal or insurance advice; your state insurance department is the place to confirm a license or file a complaint.

What an agent or broker does

HealthCare.gov lists what a SHOP-registered agent or broker can help a small business with: determining whether you're eligible for SHOP, understanding the Small Business Health Care Tax Credit, applying for coverage, comparing plans, helping employees learn about your offer, enrolling, managing coverage after enrollment, and handling renewals and plan changes.

HealthCare.gov also says that, in general, you won't pay more if you use an agent or broker, and that if you don't use one you can enroll through an insurance company directly.

Check the license first

Checking an advisor's license is the simplest protection you have.

For SHOP. HealthCare.gov's guidance for agents and brokers says they must have an active state insurance license to sell SHOP plans, must register with the federally facilitated Marketplace using their National Producer Number (NPN), and must sign the SHOP Privacy and Security Agreement every year.
Finding registered help. HealthCare.gov's Find Local Help tool lets you search by ZIP code and filter for agents and brokers registered to help small businesses.
Verifying a license. The National Association of Insurance Commissioners (NAIC) publishes contact information for every state's insurance department and notes that you can use it to find local insurance agents or file a complaint. Ask the advisor for their name as licensed and their NPN, then confirm the license with your state insurance department.
Verifying the company. The NAIC's Consumer Insurance Search encourages people to check their state insurance department's website to confirm that a company or HMO is licensed in their state.

The Department of Labor's guide to fiduciary responsibilities under a group health plan (September 2023) makes the same point for employers: when selecting service providers, ensure that any required licenses, ratings or accreditations are up to date, including for insurers, brokers and third-party administrators.

Understand how they're paid

Advisors can be paid in different ways, including commissions from insurers and fees. You should know which applies, who pays it and how much.

Federal law now requires disclosure for many employer plans. According to the Department of Labor's Field Assistance Bulletin 2021-03 (December 30, 2021), the Consolidated Appropriations Act, 2021 amended ERISA to require people who provide brokerage services or consulting to ERISA-covered group health plans, and who reasonably expect $1,000 or more in direct or indirect compensation, to disclose that compensation to a responsible plan fiduciary. The bulletin says the disclosure generally must be made reasonably in advance of entering the contract, and that it is meant to help the fiduciary judge whether compensation is reasonable and spot conflicts of interest, including payments from sources other than the plan.

The Department of Labor's fiduciary guide adds practical advice. Some service providers receive additional fees from third parties, so employers should ask prospective providers whether they get any third-party compensation, such as finder's fees, commissions or revenue sharing. When you compare estimates, ask which services the fee covers and which it doesn't.

Run a fair comparison

Choosing an advisor for your health plan is more structured than it might seem. The Department of Labor's fiduciary guide says that hiring a service provider is itself a fiduciary function for an ERISA plan, and its checklist is a useful model for any small employer.

Get information from more than one provider.
Give each the same, complete information about your business and what you need.
Compare them on the same points, such as services, experience and costs.
Ask about their experience with plans of your size and complexity.
Ask about any recent litigation or enforcement action against the firm.
Document how and why you chose.

For example, imagine a hypothetical 12-person landscaping company. The owner sends the same one-page summary to three licensed brokers, covering headcount, current plan, renewal date, budget and the top employee concerns, and then compares written proposals side by side instead of trying to recall three different sales calls.

Questions to ask a prospective advisor

Are you licensed in our state for health insurance, and what is your NPN?
Are you registered to help with SHOP coverage?
Which insurers do you work with in our area, and are there any you don't represent?
How are you paid for our account, by whom and how much? Will you put that in writing?
Besides plan selection, what do you do during the year, such as enrollment, employee questions, claims problems and renewals?
Who on your team will actually handle our account?
Will you present the full range of plan types available to us, including SHOP plans and health reimbursement arrangements, with the trade-offs of each?

Red flags

Walk away, or at least slow down, if an advisor won't give you a license number, won't say how they are paid, or pressures you to sign before you can read the documents. Be especially careful with any plan that is far cheaper than everything else and claims to be exempt from state insurance regulation. The Department of Labor's guide to multiple employer welfare arrangements (revised April 2022) warns that promoters have marketed such arrangements to small businesses by claiming to be ERISA plans beyond state regulators' reach, and that a number of them could not pay claims. Confirm any unfamiliar plan or company with your state insurance department before you pay a premium.

After you choose: keep monitoring

The relationship doesn't end at enrollment. The Department of Labor's fiduciary guide recommends a formal review process at reasonable intervals: review the provider's performance, read the reports they send, check the fees actually charged and ask about their policies and practices. A yearly review before renewal is a natural time to do this. If you're weighing plan structures with your advisor, our guide Level-Funded and Self-Funded Plans: What Small Employers Take On covers questions worth raising.

Key takeaways

Agents and brokers can help with eligibility, plan comparison, enrollment and renewals; HealthCare.gov says you generally won't pay more for using one.
Confirm the advisor's license and NPN with your state insurance department, and confirm the insurer is licensed too.
Under ERISA as amended by the Consolidated Appropriations Act, 2021, brokers and consultants expecting $1,000 or more in compensation from an ERISA group health plan generally must disclose it in advance.
Compare several advisors using the same information, and document your choice.
Be wary of cut-rate plans that claim to be exempt from state insurance rules.

Sources

Our articles are general information, not financial, insurance, tax or legal advice, and we don't sell insurance or recommend specific companies or products.

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