The National Association of Insurance Commissioners (NAIC) has recommended that states vote for legislation that will provide insurance brokers and agents with protection for their commissions from the medical loss ratio (MLR) of the new federal healthcare law’s expense cap which has been applied to medical insurers.
The NAIC advisors task force for health insurance voted to support H.R. 1206, which has been called the Professional Health Insurance Advisors Act of 2011. Rep. Mike Rogers (R-Mich) introduced this Act in Congress.
The Patient Protection and Affordable Care Act within the new federal healthcare law has stated that an insurance company must have spent a minimum of 80 percent of its premiums on healthcare costs, and is permitted a maximum of 20 percent for administration, marketing, broker and agent fees, and profits. Should the company’s expenses in those areas be greater than 20 percent, the insurer is required to provide the policyholders with a refund for the additional amount.
The NAIC has been backing the bill introduced by Rogers so that the broker and agents fees can be removed from the calculations of the 20 percent MLR cap. This is actually a change in direction for the NAIC, which had originally backed the inclusion of those fees in the MLR, in 2010.
In March, the NAIC delayed supporting of the bill so that it could collect and examine further data. Since then, in order to comply with the MLR cap regulations, insurers have had to cut their agent and broker fees. Seventy five percent of insurance brokers have experienced a decrease in their fees since the announcement of the cap.
