What Brokers Actually Earn on Group Benefits

Broker compensation on group benefits is treated as a private matter — negotiated case by case, discussed reluctantly, and rarely written down anywhere a competitor might see it. It is also, for any plan large enough to file a Form 5500, a matter of public record. Schedule A requires the plan to name every broker paid in connection with an insurance contract and to state exactly what that broker received, in dollars, alongside the premium the contract carried.

That disclosure has existed for years and is almost never read in aggregate. Read one at a time it tells you about one plan; read all of it at once it describes a pay structure. We took the 2024 plan year in full — 168,124 contracts carrying a reported premium above ten thousand dollars, a positive commission, and a covered-person count.

The most striking thing in the data is how little the commission rate moves with group size. A contract covering 25 to 99 people paid a median of 10.79 percent of premium. At 100 to 249 covered lives it is 10.00 percent, at 250 to 999 it is 9.95, and even above a thousand covered lives the median is 8.38. Across a fortyfold difference in group size the rate compresses by roughly two and a half points. Anyone who has worked in retirement plans will find that strange, because cost per participant in a 401(k) falls by half across the same range; group benefits simply does not price on that curve.

The under-25 band sits out of order at 6.97 percent, and as with most small-sample anomalies in filing data it is a composition effect rather than a discount. Contracts that small and still caught by a 5500 filing requirement are disproportionately supplemental and voluntary lines, which carry unusual commission structures and drag the median down.

Look at the seventy-fifth percentile column and something else appears: 15.00 percent exactly, in two consecutive size bands, with 13.96 and 13.00 either side. Numbers that round at that frequency across tens of thousands of independently filed contracts are not the tail of a distribution. They are a published commission schedule, showing through the data.

The dollars-per-person column is where the economics actually live, and it runs in the opposite direction to the rate. A small-group contract pays $75 per covered life; a thousand-life contract pays $18. The rate barely compresses, but the premium behind it grows nearly twentyfold, which means the profitability of a benefits book is driven almost entirely by contract size and hardly at all by the rate anyone negotiated. Two brokers on identical percentage terms can have completely different businesses.

Medical pays the lowest rate and by far the most money

Splitting by benefit line requires isolating plans that filed for a single type of benefit, which shrinks the samples considerably but removes the ambiguity of a plan that bundles medical, dental and life into one filing and one Schedule A. Done that way, the ranking by rate is close to the inverse of the ranking by dollars.

Medical is the lowest-rate line in the book at 4.71 percent of premium and, by a very wide margin, the most lucrative in absolute terms at $204 per covered person — more than twenty times what a vision contract returns and nine times a life contract. Long-term disability pays two and a half times the medical rate and produces $29 a head. This is the arithmetic underneath how benefits books are actually built, and it explains a pattern that looks irrational from the outside: ancillary is not where the money is, it is where the rate is. A broker quoting ten percent on dental and under five on medical is not being paid more for the dental, and a sponsor comparing the two percentages without converting them to dollars will reach exactly the wrong conclusion about which relationship matters.

One caveat matters more than the others here. Schedule A reports commissions on insurance contracts, and a self-funded medical plan has neither a premium nor a commission — the broker is paid a fee, disclosed on Schedule C instead. Since self-funding dominates the large-group medical market, the medical commissions visible in this data skew toward fully insured business. The 4.71 percent describes insured medical; it is not a statement about what medical consulting earns generally.

Who holds the books

Across the full corpus, 70,652 distinct broker entities appear on at least one Schedule A, which is itself a useful number — this is a fragmented market with a recognisable head. USI leads on plan count at 21,057 plans across 6,618 employers, followed by Gallagher Benefit Services at 19,283 and Marsh & McLennan Agency at 17,904.

The most informative column is the ratio. Every firm in the table services between 2.4 and 3.4 plans per employer, a remarkably tight band that reflects the standard architecture of a benefits relationship: a medical plan, a dental or vision plan, and a life or disability plan, each filed separately. A firm sitting materially below that ratio is winning single lines rather than whole programmes, which is a different business with different economics and, usually, a shorter hold on the client.

Taken together the figures support three fairly practical uses. They make an incumbent’s compensation benchmarkable, so that a sponsor being charged fifteen percent on a three-hundred-life dental contract can be shown where that sits in a published range. They allow an opportunity to be sized before the first conversation, since premium is on the filing and the median for the line and size band is now known. And they name the broker of record, which is the single most useful field on Schedule A and the one that tells you whether you are walking into a national brokerage or a two-person shop.