(Covered California image)

The California public exchange could pay small-group agents a commission of 6.5 percent during the first year that a health plan was in effect.

The commission rate would fall gradually over the next four policy years, then settle at 5 percent in the sixth policy year and later policy years.

If annualized premium for a case reached $500,001 or more in a contract year, the commission rate would fall to 1 percent for the amount over $500,001.

The managers of the Covered California Small Business Health Options Program (SHOP) division have posted the agent commission schedule proposal in a board meeting packet.

Covered California is supposed to begin taking applications for 2014 coverage Oct. 1.

The board hopes to approve the proposed regulations Thursday and give final approval to agent regulations and the agent agreement by Oct. 1.

The exchanges run by the U.S. Department of Health and Human Services (HHS) and most state-based exchanges are having the exchange plan issuers negotiate commissions directly with producers and pay the commissions directly to the producers.

Covered California is using that approach in the individual market, but it has said it will handle commissions itself in the SHOP market, to simplify the process of offering employers multi-carrier health coverage programs.

Covered California also is proposing to:

  • Cut the required amount of agent errors and omissions coverage to $1 million, from $3 million.
  • Replace a requirement that exchange agents take annual recertification exams with a requirement that they get four hours of continuing education courses each year.
  • Create a mechanism for exchange agents to dispute terminations. 

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