Proposed HHS Rule Would Equalize Commissions Inside and Outside Exchanges
The Department of Health and Human Services recently released a proposed rule that, if approved, would require carriers to pay brokers the same compensation for plans sold through a federally facilitated state exchange, or a similar plan outside the exchange.
According to the proposal, HHS would certify a health plan as “qualified” to operate in a federally facilitated exchange only if broker compensation for that plan is “similar” to compensation offered for “similar health plans” offered outside the exchange. The compensation would apply to individual plans or plans sold through the exchanges’ Small Business Health Options Program (SHOP). The proposal does not define “similar health plans,” but instead requests comments on whether the term is specific enough or too vague.
An additional rule proposal states that HHS plans to prevent insurers from setting commissions on certain policies so low that they discourage enrollment. The intent of the rule is to ensure fair, equitible market availability for all plans and not to use agent commissions to discriminate against certain policies.
The Patient Protection and Affordable Care Act (PPACA)’s medical-loss-ratio (MLR) provisions require insurers to spend at least 80 percent of individual and small-group, and 85 percent of large-group premiums on medical expenses. The remainder is spent on administrative costs, including commissions. Since the MLR provision went into effect in 2011, carriers have slashed commissions, some by as much as 50 percent.
What It Means to Agents: The recent rule proposals are creating a framework for an agent’s participation in a federally facilitated exchange. PIA is working directly with HHS in the finer details covering areas like how a consumer can contact an agent through an exchange; what the exchange registration process for an agent is; and what the exchange training requirements will be for an agent. We anticipate these answers in the coming weeks and months. While the ACA doesn’t create an ideal situation for an agent, PIA remains committed to working with regulators to ensure that consumers have clear access to an agent and that such agents are fairly compensated.