Louisiana Senator Co-Sponsors Bill to Protect Agent Health Commissions
Two U.S. senators have filed a bill to clarify that agent compensation should be excluded from the federal health reform Medical Loss Ratio (MLR) requirement for the individual and small group markets.
Sen. Mary L. Landrieu, D-La., chair of the Senate Committee on Small Business and Entrepreneurship, and Sen. Johnny Isakson, R-Ga., introduced S. 2068, the Access to Independent Health Insurance Advisors Act. Sens. Lisa Murkowski, R-Alaska, and Ben Nelson, D-Neb., are also cosponsors of the legislation.
Under the Department of Health and Human Services’ (HHS) interpretation of the MLR provision in the Patient Protection and Affordable Care Act, health insurance carriers are required to treat agent and broker commissions as part of their administrative costs. S. 2068 excludes from the MLR compensation earned by independent agents and brokers that serve the individual and small group markets.
“I am concerned that HHS’s interpretation of the health care law threatens the ability of insurance agents and brokers – many of whom are one- or two-person small businesses – to continue providing essential services to consumers who depend on them to assist with coverage or claims problems,” Sen. Landrieu said in a statement released by her office
This legislation is supported by the National Association of Health Underwriters (NAHU), the Independent Insurance Agents & Brokers of America (IIABA) and the National Association of Insurance and Financial Advisors (NAIFA).
The MLR requirements for insurance carriers went into effect on Jan. 1, 2011. Under the law at least 80 percent (individual and small group) or 85 percent (large group) of premiums collected by the carrier must be spent on “health care quality improvement.” No more than 20 percent or 15 percent, respectively, may go towards “non-claims costs.” If a carrier does not meet these ratios, rebates are due to the consumer.
The law did not statutorily address how to classify independent agent compensation under the MLR formula. However, the HHS ruled that not only was agent compensation included in the MLR formula, it was included as a part of the “non-claims costs” category, according to the IIABA.
Reps. Mike Rogers (R-Mich.) and John Barrow (D-Ga.) introduced similar legislation in the House of Representatives (H.R. 1206, the Access to Professional Health Insurance Advisors Act of 2011), which has 160 bipartisan cosponsors.