NAIFA Proposes Changes to Federal Health Care Regulations

NAIFA President Paul Dougherty, in a letter to the federal Centers for Medicare & Medicaid Services (CMS), has proposed changes to health care regulations under the Affordable Care Act (ACA). The letter is in response to a CMS Request for Information asking for public input to identify unnecessary or ineffective ACA regulations.

The Medical Loss Ratio

The ACA requires health plans to spend at least 80 percent of premiums on medical claims (85 percent in the large group market) and includes advisor compensation in this so-called medical loss ratio (MLR) calculation. As a result, most plans have drastically cut advisor commissions. A NAIFA survey of advisors found that 80 percent have experienced reduced compensation because of the MLR rule, with these reductions often exceeding 50 percent.
Advisors have responded by reducing the services they provide clients, such as claims assistance and small business human resources support. Many advisors have left the health insurance market and others are considering doing so. This leaves consumers and small businesses with little or no access to advice from licensed, professional health insurance agents at a time when purchasing and providing health insurance has become much more complicated.   
CMS regulations currently exempt taxes and regulatory fees from the MLR calculation. For the benefit of consumers who rely on the advice and services of advisors, NAIFA urges CMS to also exempt agent and broker fees and commissions.

Short-Term Health Insurance Coverage

Dougherty also asked CMS to reconsider a regulation limiting short-term health plans to 90 days. These plans give consumers access to temporary, basic, and affordable coverage, which, while not compliant with the ACA, often provide protection during a coverage gap. The plans are can be particularly beneficial for a person who loses coverage and must wait for an open-enrollment period to get more comprehensive coverage.
Previously, federal rules limited short-term plans to 12 months or less. NAIFA suggests that CMS return to this 12-month limitation.

Additional Regulatory Changes

NAIFA asked the Department of Health and Human Services to establish national standards for health insurance plans, which could discourage costly state-mandated benefits.
  • NAIFA supports the development of state-run high-risk insurance pools to meet the needs of people with costly medical conditions as well as federal grants to states to fund the pools.
  • NAIFA has asked CMS to begin training and certification for agents who sell insurance on ACA exchanges in June rather than August. The earlier start would free up time for agents to help clients preparing group benefits plan renewals and, unlike the August start, would not coincide with open enrollment for Medicare Part D and Medicare Advantage.
  • NAIFA noted that the ACA’s disclosure requirements for employers and insurance carriers are onerous. While these requirements are not CMS regulations, Dougherty noted in his letter that NAIFA intends to raise concerns over these requirements with the internal Revenue Service.
For NAIFA's complete set of principles that support a workable solution to our health care problems, see our publication: Rx for Health Care: The Advisors' Perspective.
  • Posted July 11, 2017 IN

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