Some Insurance Brokers Opting Out Of ACA Markets

April 09--Compensation for health underwriters has dwindled over the past several years, a Wichita Falls professional said Friday, and now it's reached a point to where brokers are leaving the individual marketplace established under the Affordable Care Act.

Kelly Fristoe, a regional vice president for the National Association of Health Underwriters and broker at Financial Partners, said some insurance companies have stopped paying commissions to brokers who have signed up Americans for Obamacare policies. Some, like Blue Cross Blue Shield of Texas, have significantly reduced the broker commissions to 2.5 percent.

That has resulted in few in this area who have opted out of the individual market because, as a business, it isn't economically feasible.

And to make it even harder, he said, BCBSTX originally said it would pay commission on policies completed the during open enrollment period only, meaning any plans during special enrollment periods would not be compensated. But, the company told underwriters that if they logged into the BCBSTX system, completed their training and were certified by the insurance giant, then they would be able to earn commission from policies completed during special enrollment periods or qualified life-changing events.

"It's been more of a struggle than it has been previously," Fristoe said. "But we're still in it because we're committed to this smaller market then if we were in the Dallas-Fort Worth area."

He said BCBSTX will begin offering commissions up to 5 percent for those who are able to maintain the same number of enrollees from the previous year. All others will start out at a 2.5 percent commission.

The Centers for Medicare and Medicaid Services acknowledged that there is a compensation issue between brokers and insurance carriers. CMS in a document dated Dec. 16 stated that the insurers specifically targeted compensation as it related to persons with more health problems.

"We have become aware that some issuers are attempting to discourage the offering of insurance coverage to higher risk individuals by reducing or eliminating commissions and other forms of agent and broker compensation for sales to such individuals," the agency said. The statement was in general terms regarding insurers.

CMS said any type of commission structure that discourages agents and brokers from enrolling customers with significant health issues is prohibited.

Fristoe said brokers leaving the market place could potentially have negative consequences on consumers. According to previous CMS chief Kevin Counihan, he said, at least half of those enrolling in Obamacare plans were guided by a licensed broker or agent who can take a deeper look into finances and other variables to help consumers purchase the best plan for their situation and health issues.

Charging a fee has also been an option, Fristoe said, but it doesn't make sense to charge a fee for people already in lower portions of income brackets who are only able to get insurance through subsidies.

Fristoe said the NAHU has been in conversation with Health and Human Services Secretary Tom Price regarding the broker commission topic. He said one of the talking points has to do with the medical loss ratio, which is the percentage of premiums an insurer spends on claims and expenses that improve health care. The majority of that percentage goes toward claims, and expenses -- including broker commissions -- gets the smaller cut.

He said insurance companies are changing the amount or eliminating commissioners to find some profit, so NAHU has lobbied to have the medical loss ratio removed.

Follow John Ingle on Twitter at @inglejohn1973.

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