Georgia May Let Insurers Skip Paying Some Health Commissions

The top of the Georgia Capitol Building dome

Health Agents for America (HAFA) says a state-level health insurance agent compensation bill in Georgia is a bad deal for agents and brokers who sell health insurance.

The bill, Georgia House Bill 64, would require a health insurer that builds agent commissions into its official rate filings to pay agent commissions consistent with the levels included in the filings.

The bill would, however, let an insurer eliminate agent commissions for individual major medical coverage sold during a special enrollment period (SEP).

(Related: HAFA Urges Agents to Keep Fighting)

Supporters argue that the bill would help agents and brokers, by requiring insurers to live up to their agent compensation commitments, and by discouraging insurers from fibbing about commissions to persuade regulators to let them increase rates more. Supporters say the bill would make producers better off in most cases.

HAFA likes the idea of a health insurer paying agents as much as it told state insurance regulators it would pay.

HAFA opposes the idea of a state officially blessing an insurer's move to eliminate agent pay for individual major medical insurance sold during a special enrollment period.

"We are concerned," HAFA says in a statement it emailed to members and supporters. "Georgia would be the first state in the nation to pass a bill legislating and making it lawful for the insurance companies to withhold compensation."

It's not clear whether any other state or federal body has ever passed a law that explicitly lets companies withhold compensation owed to people in any other profession, HAFA says.

"We believe the people of Georgia deserve the option to use an independent agent, and should they choose to use an agent/broker, [the agent/broker] should be paid a fair wage," HAFA says.

The Special Enrollment Period System

Drafters of the Affordable Care Act eliminated most of the strategies health insurers once used to reduce claim costs, such as medical underwriting and limits on coverage for pre-existing conditions.

Regulators, insurers and managers of ACA public exchange programs tried to give insurers some help with managing claim costs by establishing an annual "open enrollment period" system.

An open enrollment period limits when people can buy health coverage.

Consumers can now buy individual major medical coverage during an open enrollment period, from Nov. 1 through Dec. 15 each year, without giving any reason for buying coverage.

When consumers want to buy coverage at any other time of the year, through a SEP, they must show they have what the government sees as a good excuse to be shopping for coverage, such a move to a new state, or the birth of a baby.

The designers of the SEP system hope it will encourage healthy people to pay for coverage, by raising the possibility that healthy people who fail to buy coverage at the right time may end up with no practical way to pay their medical bills.

SEP Abuse?

Many health insurers have argued that some consumers have, in fact, used the SEP system to wait until they get sick to pay for coverage.

Some consumer groups have questioned whether SEP abuse is really a problem. Managers of the public exchange in the District of Columbia, for example, have said they have seen no evidence of SEP abuse occurring there.

But managers of many state-based public exchange programs, and the managers of the federal HealthCare.gov public exchange program, have tried to help health insurers by developing tougher SEP applicant eligibility and screening rules.

Many of the health insurers still in the individual market are trying to cut down on what they believe to be SEP abuse by eliminating compensation for agents and brokers who help clients enroll in coverage through SEP applications.

Complex Decisions

HAFA argues that failing to pay commissions to producers who help with SEP applications is wrong.

H.B. 64 "would remove the citizens of Georgia's option to use a professional while making a very complex decision regarding their health insurance needs," HAFA says.

If insurers fail to pay commissions to Georgia agents who help with SEP applications, "Georgia citizens who lose a job, get married, have a baby, get divorced, [or] lose a spouse are being denied access to a licensed, educated and insured professional," HAFA says.

Resources

More information about the bill, including links to the current and past versions of the text, is available here.

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