Changing regulations challenge health agents and brokers, advocates say

Insurance laws impacting agents, brokers

By Doug Bailey

Constantly changing legislation and fluctuating regulations take their toll on insurance agents and brokers, even threatening their continued existence in the market, advocates say. Yet at the same time, the necessity of independent brokers to help consumers wade through the thicket of health care rules and choices has never been higher.

The volatile factors of government health care expansion, the fallout from COVID-19, the looming midterm elections, along with proposed legislative changes all could change the way health agents do business and potentially create market confusion for consumers.

The most important issues facing agents and brokers currently are the threats to employer-sponsored health insurance programs and the dwindling commissions for their services, according to two health insurance agent association leaders who presented at a recent webinar sponsored by InsuranceNewsNet, moderated by managing editor Susan Rupe.

Marcy Buckner, senior vice president of government affairs at the National Association of Health Underwriters (NAHU), said regulatory complexities being heaped on employer sponsored coverage plans is discouraging employers from continuing to participate in the programs.

“As more and more regulations are put in place, it makes it harder for employers to stay in the market and harder for [agents and brokers] to assist their clients and be able to help them with all the different complexities,” she said.

Most vital, she said, are considerations in Congress to repeal exclusions that allow employees to deduct employer health care contributions from their income.

Dropping exclusion considered

“There’s some thought on the Hill that dropping the exclusion would be a good way to put some money in the federal treasury,” she said. “But we feel that it would be one of the largest tax increases on the middle class in quite some time and would possibly put employers in a situation where they’re no longer able to offer employer-sponsored coverage. So, we are very concerned about that.”

Ronnell Nolan, CEO of Health Agents For America (HAFA), said getting paid fair commissions is foremost in the minds of her members.

“The passing of the [Affordable Care Act] automatically cut our commissions by 50%,” she said. “So the main reason HAFA was started was to fight for the independent agent and the fact that we needed to be paid a fair wage. In many instances, insurance companies have found ways to not pay the independent agent so it's something that we fight daily. We will not have an industry, we will not have agents and brokers in the market, if they cannot be fairly compensated.”

There have been some silver linings in that regard, Nolan said. The Centers for Medicare and Medicaid Services recently ruled that failing to pay agent commissions during special enrollment periods violates the ACA.

“That was a huge victory and something that we’ve worked closely on,” she said. “It was actually written in 2016 and just last week CMS said it was making the change. Now our biggest issue is whether they are going to go back and pay commissions that should have been paid during the special enrollment periods.”

'The family glitch'

Another high-profile issue currently involves trying to rewrite or reinterpret what’s called “the family glitch” in the Affordable Care Act. The family glitch is a loophole that removes an employee’s dependents from the equation to determine if a worker qualifies for the ACA.

As it stands, people qualify for ACA marketplace subsidies if their employer requires them to spend more than 9.83% of their income on the company health plan premium. But this qualification is based on the employee’s “self-only” coverage, and not the premium costs that come with adding dependents. Basically, as long as an employer offers an employee-only plan that meets the income requirements and is deemed affordable for the individual, the IRS will not consider that employee or their family as in need of ACA help.

According to the Kaiser Family Foundation, 5.1 million people are impacted by the Affordable Care Act’s “family glitch.”

“The family glitch is going to be a big issue,” said Nolan.

Despite the enormous challenges facing the agents and brokers, and potential for leadership changes in Congress, both association leaders felt the need for independent advice and counsel for families trying to determine the best health care coverage options has never been greater and the value of agents can be demonstrated.

“I think that we survive regardless of what box we’re put in,” said Nolan.

“It’s important to realize that agents and brokers are the ones who are going to be able to sit down and help families and individuals make the decisions about health care coverage,” said Buckner. “So I think that agents are really poised on the horizon to show their value to this Congress and the next.”

Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at [email protected].