The Sneaky Tactics that ADP & Other Payroll Companies Use to Steal Health Insurance Commissions

This article was originally published on LinkedIn on June 16, 2020. You can find the original post here.

So I noticed that I stopped getting commissions on one of my Anthem health insurance clients after February of this year. I called Anthem today, and they said that the group requested an Agent of Record change as of 03-01-2020. In non-health insurance broker language, this means the client fired me. While I should have, I never got any communication from Anthem about the change, so this was a surprise and disappointment to me.

I sent my usual “It was nice working with you, best wishes” note to the client and was surprised when she called me immediately to tell me that she never requested the change. I called Anthem again and they confirmed that they had a letter signed by my client dates 02-05-2020, requesting the new Agent of Record assignment. Of course Anthem wouldn’t tell me who the new Agent of Record was, but I had my suspicions…

So I called my group contact and had an awkward conversation with her explaining that Anthem had a letter that she had signed. I asked her about her company payroll and learned that she was in the process of moving from ADP to Heartland (my preferred payroll partner). After a little more investigation, she discovered that ADP told her that they couldn’t process her company’s payroll deductions for health insurance without getting the Agent of Record letter (not true) and they did not explain the ramifications of her signing the letter they gave her. The client told me that she was embarrassed, angry, and felt tricked by ADP, and she was happy that she made the move to Heartland. Thankfully, she graciously wrote a letter to Anthem to correct the Agent of Record assignment and get my commissions paid back to March.

I wish that this was an isolated incident with ADP, or with payroll companies in general, but it’s not. I shared this story with a few of my colleagues and clients, and here’s some of the feedback I received: 

ADP has been super aggressive about trying to schedule meetings to give us a package with everything – benefits, workers’ comp, etc.

ADP sometimes presents the Agent of Record change letter as a contact change letter so the client doesn’t really understand what it is for.

I saw this happen recently to a broker whose client had unknowingly signed an Agent of Record letter when signing up for QuickBooks integration. 

This happened to me as well. [My client] had NO idea he signed the letter. ADP snuck it in.  

I even had it happen under a CPA where they signed a document thinking it was updating the main contact but it was in fact an Agent of Record letter.

Payroll companies continue to leverage their payroll relationships to get access to their clients’ employee benefits revenue (without providing the same strategy and service that an independent health insurance broker can provide), and they often use aggressive, misleading and/or sneaky tactics. It’s important to stay on top of these relationships and make sure you know what you’re getting if they ask you to sign something!

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