Brokers and Agents are the best, and most helpful, resource for individuals who are seeking health insurance. Without an employer sponsored coverage option, navigating health insurance plans without the help of a licensed professional is a daunting task. Every day, insurance agents work to help their clients find the coverage that is right for them at a price they can afford.
When the Affordable Care Act (ACA) was passed, the task became even more daunting. Not only had the options increased, but individuals and their brokers had to navigate new distribution channels and be trained and certified to be able to ensure any of their clients who might be eligible for a tax credit or subsidy would benefit. In states without a specific exchange, Healthcare.gov was the only way to get a subsidy for those customers. But now, after several years of training and the annual open enrollment frenzy, many agents are asking themselves if selling these subsidized plans are in fact a good idea when insurance companies increasingly refuse to pay commissions.
More and more insurance carriers are cutting commissions to individual plans both inside and outside of the Healthcare.gov website. Despite this, brokers still account for more than 50% of all sales by helping consumers navigate coverage options, network adequacy, price and value. Once an individual enrolls, brokers often advocate for their customers on many post sale activities such as claim denials and coverage questions.
All that is now beginning to change. Between 2015 and 2017, there's been a nearly 35% drop in the number of registered brokers for HealthCare.gov. According to data recently released by CMS, the actual number of registered brokers dropped from more than 103,000 to now just over 67,000.
Other recent trends we see are the number of individuals selecting bronze plans during open enrollment. That number jumped 6% between 2015 and 2017 indicating that consumers are looking for a way to offset skyrocketing premium increases. Further evidence of this is that during that same period, 47% fewer people chose more robust gold plans and 90% fewer consumers chose platinum plans. Many of these consumers are downgrading coverage into Silver plans.
Under the ACA, insurance carriers were to pay identical commissions regardless of whether a plan was subsidized or not. In December 2016, CMS issued guidance that instructed carriers to be consistent with their commission payments and to be compliant with the law. This new policy goes into effect January 1, 2018. But has anything changed because of the CMS guidance? The guidance did nothing to address the commissions during a special enrollment period. CMS is also now investigating why some brokers weren’t paid commissions at all.
How is your agency dealing with the loss of commissions in Healthcare.gov plans? Some are simply no longer helping consumers find the plans that best fit their needs, given the time and education that it takes to get a person enrolled. Some are now charging their clients a fee where allowed by their states and even electing to forego commissions by the carrier.
Regardless of your strategy, the real loser is both Brokers and their clients. Exchange enrollment is shrinking at the same time there are fewer brokers to assist. Without a Legislative and Regulatory solution in the near future – there may be no winners at all.
Stay tuned as we continue to monitor these and other news items and how brokers and agents can provide their clients with the most effective coverage solutions.