States look to protect brokers on Healthcare.gov from commission cuts

States look to protect brokers on Healthcare.gov from commission cuts

Georgia legislation passed a bill that will create guidelines for insurance carriers to pay commission to brokers. House Bill 64 states: 

  • A carrier that issues a benefit plan in this state will pay a commission consistent with the amount proposed in the rates filed with the department 
  • No compensation is required for any individual health plan sold during a Special Enrollment Period (SEP) 

Brokers work with both individuals and groups to ensure they properly enroll into a Qualified Health Plan. In the past, brokers received a set percentage based on the premium, which was their source of income. Over the past few years, the commission began to dwindle to nothing on the individual market. This has made brokers face the question of if they would continue to advise those individuals without seeing any payment from it. 

According to CMS, the number of brokers leaving Healthcare.gov has significantly increased from 2015. For April 2018, there are 52,000 brokers registered on Healthcare.gov, compared to 103,000 in 2015. This 50% drop can also make an impact on the number of individuals who enroll. 2018 saw a 3% drop from 12.2 million to 11.8 million in individuals enrolled through the Affordable Care Act exchange.  

Health Agents for America (HAFA) have split reviews of the bill, as it does promise some compensation, but can eliminate pay during a Special Enrollment Period. A Special Enrollment Period is a time outside of the yearly Open Enrollment Period when you can sign up for health insurance. This means brokers will not be paid on any policy they write for someone who has a qualifying life event which includes losing health coverage, getting married, having a baby, or adopting a child. Many individuals seek the assistance of a broker during this time for guidance, and now the broker will be doing the work for free. 

House Bill 64 will create more structure for the payout of brokers. Prior to the ACA, insurance brokers generally received 5% of the monthly premium for a given policy. Modern Healthcare reports that, more recently, insurance carriers have paid based on the metal levels of coverage. They are paying out commissions to only those who enroll bronze plans – the least expensive. Insurance carriers, however, have argued that they need to make sure they are not losing income and can remain financially stable. 

Georgia is just one of multiple states that are enacting regulations to help protect brokers and require insurance carriers to pay out commissions. Connecticut has begun requiring broker commissions starting in 2018 through their exchange, Access Health CT. California’s exchange platform, Covered California has set a schedule of commissions to pay out brokers as well. 

The views and opinions expressed by the authors on this blog website and those providing comments are theirs alone, and do not reflect the opinions of Softheon. Please direct any questions or comments to research@softheon.com.

Kayla Tansey

Kayla Tansey is a Senior National Account Executive, working with Softheon's broker solutions team. She has experience working in employee benefits, advising businesses on their group health insurance plans. Kayla earned her bachelor’s degree in Communication Studies, Public Relations & Advertising and Business Economics from SUNY Cortland.

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