CMS speaks: Failing to pay agent commissions violates ACA

Georgia wants to set up its own health insurance marketplace. — The federal government says Georgia's health insurance marketplace plan does not meet regulations.

By Susan Rupe

Health insurance agents have complained for years that some insurers have reduced or eliminated commissions on individual health coverage sold through the marketplaces during special enrollment periods.

Now the Centers for Medicare & Medicaid Services has something to say about it – that the practice violates a provision of the Affordable Care Act.

In a list of FAQ issued Tuesday, the CMS said it “has become aware” that some insurers offering individual health insurance coverage through the ACA exchanges have cut back on commissions or not paid commissions at all during special enrollment periods.

The CMS said that insurers that pay reduced or no commission to agents and brokers who assist consumers during special enrollment and pay higher amounts for getting people covered during open enrollment in the same benefit year “violate the guaranteed availability provisions of the Affordable Care Act.”

The guaranteed availability provisions in section 2702 of the Public Health Service Act, as added by the ACA, generally require issuers to accept “every employer and individual in the state that applies for such coverage,” the CMS said.

This requirement applies to issuers offering non-grandfathered health insurance coverage in the group or individual markets, through or outside of the marketplaces. As implemented in the individual market, insurers are required to guarantee issuing coverage to all individuals during the annual open enrollment period, as well as to eligible individuals during special enrollment periods.

Insurers “commonly use agents and brokers as an important part of their marketing and sales distribution channels,” the CMS said. The way insurers structure their compensation to agents and brokers influences the marketing to individual consumers, as well as enrolling and retaining those consumers in coverage.

“An arrangement that reduces or eliminates the commission or other compensation and agent or broker receives for SEP enrollments compared to the commission or other compensation received for OEP enrollments in the same benefit year discourages agents and brokers from marketing to and enrolling individuals eligible for an SEP,” the CMS said. “These practices therefore violate the guaranteed issue protections afforded to these individuals under the statute.”

Health Agents for America is among the agent associations that has had an ongoing concern with some insurers not paying commissions during special enrollment periods. On Tuesday, HAFA issued a statement that said:

“Today’s FAQs provide guidance that paying differential compensation to agents and brokers for coverage in the same benefit year based on whether the enrollment is completed during an SEP or during the OEP is prohibited under federal law. These practices violate the guaranteed availability protections afforded to these individuals under the Affordable Care Act.”

Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected]. Follow her on Twitter @INNsusan.