Preparing for Battle

As for agents, their most urgent priority is repealing a provision of the Patient Protection and Affordable Care Act that requires any business to file a separate 1099 with the Internal Revenue Service for expenditures paid to a single vendor totaling $600 or more during any year. The provision goes into effect in 2012.

Another is to seek a legislative or regulatory exemption for agent commissions from the so-called "medical loss ratio" provision that imposes a relatively frugal 15% to 20% limit on administrative costs as a proportion of health care premiums. The MLR provision went into effect on Jan. 1, 2011.

A third priority is to protect the interests of agents and brokers in the health care exchange system that goes into effect in 2014, the key provision of the PPACA.

The National Association of Insurance and Financial Advisors also seeks to eliminate the 3.8% tax on annuities imposed in 2014 as a pay-for on the health care bill.

Diane Boyle, NAIFA vice president, federal government relations, said that under the legislation, the tax would be paid when the annuity is distributed. This tax would also affect securities held in a non-qualified deferred compensation plan.

However, if an annuity is held in an IRA, it would not be subject to the tax. This tax, if not repealed, would only impact high-income families, individuals with incomes above $200,000 and families with incomes above $250,000.

As for the MLR, NAHU officials said, that Congress should repeal the MLR requirements or pass legislation to carry out the NAIC's recommendation that final MLR standards accommodate adequate compensation for

professional health insurance advisers, the idea being that licensed insurance professionals play a valuable role in helping consumers navigate the health care system, and will not be able to continue to do so if their commissions are throttled by MLR requirements.

Boyle added that, "We're not attacking the entire bill, we are just looking to improve it, and there are a number of ways that can be accomplished."

Joel Wood, senior vice president, government affairs for the Council of Insurance Agents & Brokers was not as restrained, saying that the CIAB's top mission in the upcoming Congress is to resolve the "marketplace confusion" and potential erosion of group health insurance policies that has been caused by the MLR provision.

Wood, who calls the MLR a "government price control," said it will have "the perverse effect" of serving as a disincentive for health plans to lower costs. Groups under 100 participants face a 80% MLR while larger groups face an 85% MLR.

"If left unchanged, there is no doubt that many individual and small group insurers will exit the marketplace, displacing millions and hastening the erosion of the employer-provided group marketplace," Wood said. "There are many aspects to the PPACA that we believe are unwise, but the MLR provisions are the worst."

Even with the Republican surge of 2010, however, Wood admitted that repealing or changing PPACA will be exceptionally difficult to accomplish.

At the same time, NAHU officials said they are working with policymakers and other stakeholders to ensure that health reform implementation "is carefully crafted and measured" to mitigate near-term premium increases and does not undermine reasonable private sector health plan innovations aimed at health promotion, patient safety and cost containment.

NAHU also said it would work to repeal a provision of the law dealing with Medicare Advantage that beginning January 1, would prevent beneficiaries from disenrolling from their Medicare Advantage plan in order to enroll in traditional Medicare. "This can cause beneficiaries to pay more in medical expenses to the hospitals, medical facilities, physicians, and for certain medical diagnostic tests," NAHU officials said.