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PIA Says NAIC, HHS Can Still Do Right By Agents

Healthcare reform legislation passed by the Obama administration last year stipulates that for individual health insurance policies, 80 percent of premiums must be spent on...
March 1, 2011

Healthcare reform legislation passed by the Obama administration last year stipulates that for individual health insurance policies, 80 percent of premiums must be spent on medical care and quality improvement activities, with administrative costs limited to a maximum of 20 percent. The cap for group health plans is 85/15 percent.

The problem: preliminary regulations issued by the Department of Health and Human Services (HHS) did not exclude producer compensation from this medical loss ratio (MLR) calculation. This puts intense downward pressure on compensation for agents and brokers. The Washington, D.C., newspaper Politico, quoting documents it has obtained from two carriers, reports that pay for health insurance brokers could be slashed by more than 50 percent in some cases because of the new health reform rules. PIA has received a number of member calls confirming this, and across many more than two carriers.

PIA is calling on the National Association of Insurance Commissioners (NAIC) to do what it failed to do last year: recommend to HHS that producer compensation be exempt from the MLR calculations. An opinion article stating this is running in the March issue of American Agent & Broker magazine. In addition, when PIA members participate in the PIA Federal Legislative Summit they will express support for a bill that Rep. Mike Rogers (R-Mich.) plans to introduce that would exempt health insurance agent commissions from the MLR formula.

Update: On Monday February 28, the NAIC Professional Health Advisors Task Force (EX), chaired by Commissioner Kevin McCarty (FL), met by conference call and agreed to hold a public hearing during their next meeting in Austin March 26-29 that would examine health producer compensation issues. Commissioner McCarty stressed that the agents must not be permitted to be "squeezed out" of the marketplace by severely restricting their compensation. During the call, Commissioner Sandy Praeger (KS) expressed some optimism that HHS is receptive to modifications that would allow agents to receive fair compensation. PIA will be there.

Click here to read NAIC, HHS Can Still Do Right By Agents (American Agent & Broker 3/2011)

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