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Insurance Agent

Who they represent: Agents work on behalf of insurance companies.

Types of agents:

Captive Agent – represents a single insurance company (e.g., State Farm, Allstate).

Independent Agent – represents multiple companies but still maintains contracts with those carriers.

Compensation: Paid by insurance companies, typically via commissions.

Client relationship: Helps clients find suitable products, but options are limited to the insurers they are appointed with.

Insurance Broker

Who they represent: Brokers work on behalf of the client, not the insurance company.

Role: Searches the marketplace across many insurers to find the best coverage and pricing for the client’s needs.

Compensation: Usually paid by commissions from insurers, though some may charge fees.

Client relationship: Owes a fiduciary duty to the client, meaning they are legally bound to put the client’s interests first.

How Brokers Get Paid

Commissions from Insurance Companies (most common):

When you buy a policy, the insurer pays the broker a percentage of the premium.

Example: For a $500 monthly premium, the broker may receive 2–5% from the insurer.

Broker Fees (Note: Magee Insurance does not charge broker fees):

Some brokers charge clients directly, especially for employee benefits or specialized coverage.

Flat annual fee (e.g., $2,000 for benefits consulting).

Per-employee-per-month (PEPM) fee in group benefits.

One-time service fee for policy placement.

Combination of Both:

Some brokers receive both commissions and consulting fees, especially when providing ongoing support, compliance, and HR tools.

Major Medical Health Insurance (ACA-Compliant)

✅ Covers all “Essential Health Benefits,” such as hospitalization, doctor visits, prescriptions, preventive care, maternity care, mental health, and pediatric services.

✅ No pre-existing condition exclusions.

✅ No annual or lifetime limits.

✅ Subsidies may be available through the Marketplace.

✅ Standardized and federally regulated.

Other Private Plans (Non-Major Medical)

⚠️ Not ACA-compliant and often limited in coverage. Includes:

Short-Term Health Plans – temporary, often exclude pre-existing conditions.

Fixed Indemnity Plans – pay set amounts per service/day; you cover the rest.

Health Sharing Ministries – not insurance; no guaranteed payments.

Supplemental Coverage – accident, critical illness, dental, vision; designed to complement, not replace, major medical.

Key Difference:

Major Medical = Comprehensive protection, ACA-regulated, safeguards against catastrophic costs.

Other Private Plans = Limited, lower cost, but may exclude essential coverage.