More Health Carriers Exit the Individual Health Insurance Market Leading to Fewer Choices for Consumers and Lower Commissions for Advisors

Some of the largest health insurers have decided to withdraw from selling individual market health insurance policies in a number of states to mitigate significant financial losses they have incurred while offering these plans. Most recently, Blue Cross Blue Shield of Nebraska announced it would not sell exchange plans in 2017. This has left consumers with limited health insurance options and resulted in many policyholders having to obtain other coverage as a result of discontinued plans.
 
For advisors, these developments are even more troubling, as the carriers have moved to further cut costs by significantly reducing agent commissions or even opting to not pay commissions on individual market health insurance policies sold after a certain date. This decision does not take into account the critical role of the advisor. Buying health insurance is more complex than ever, and consumers need the expertise of an advisor to help navigate the complicated health insurance requirements under federal and state laws. In some states, consumers may be left without the assistance of an experienced and knowledgeable advisor to help them through the process of selecting and purchasing the right health insurance plan. For instance, in Connecticut, where health insurers will not pay agent commissions on individual market health insurance policies in 2017, officials at the state’s health insurance exchange have publicly expressed concern that consumers will not have access to professional advice when they need it the most.  
 
Along with other factors, the decisions by the health insurance carriers to limit participation in the individual health insurance market and reduce agent commissions will ultimately harm both consumers and advisors by reducing consumer choice and even leading to advisors to exit the health insurance market. One way to address this issue is to ultimately remove entirely advisor commissions from the Medical Loss Ratio (MLR) calculation in the Affordable Care Act (ACA). The MLR requires that individual market health insurance policies spend at least 80% of premiums on claims, leaving the remaining premium revenue to spend on administrative costs – including commissions to advisors. 
 
NAIFA continues to advocate for federal legislation to remove advisor compensation from the MLR, which could help ensure that advisors are fairly compensated for their services and that consumers have access to an advisor to help them purchase the right health insurance policy. 
 
  • Posted October 7, 2016 IN
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Comments
Ed Anderson
It is time for producers to migrate to fees on individual health insurance where permitted by state law.
10/12/2016 7:57:10 AM