New York State Caps Health Commissions at 4%

New York state regulators have acted to protect the health coverage market there against a potential threat to stability: the possibility that insurers might use high commissions to get more than their fair share of the state’s individual and small-group major medical business.

In 2018, the state will limit individual and small-group health insurance producer commissions and fees to 4% of the premiums.

(Related: Benefits Firms Wrestle With Storms)

Troy Oechsner, the state’s deputy superintendent for health, told health insurers, managed care companies and other coverage providers about the 2018 producer compensation cap in a memo issued Monday.

New York already caps health maintenance organization plans’ commissions at 4%, Oechsner writes in the memo.

“Because New York’s health insurance market is best served by fair competition among all issuers, commissions and other fees should not be structured to give issuers an unfair market advantage,” Oechsner writes.

Regulators have decided to impose a 4% cap on the producer compensation paid by all coverage providers, including insurance companies, to ensure a level playing field and market stability, Oechsner writes.

Agents and brokers in other states have been complaining in the past two years about carrier moves to reduce or eliminate producer compensation, not welcoming efforts by carriers to use high commissions to increase individual or small-group major medical sales.

James Schutzer, the legislative committee co-chair at the New York State Association of Health Underwriters, who is a benefits consultant at J.D. Moschitto & Associates Inc. in White Plains, N.Y., said he was not aware of any carriers in the state paying more than 4% for individual or small-group major medical business.