These industry professionals have also been limiting their new clients as a strategy to keep up their incomes.
Traditionally, insurance brokers have made a significant portion of their earnings via health insurer commissions. However, when it comes to the sale of health plans, considerable changes have been made recently in Massachusetts.
Health insurance companies have either eliminated or sizably reduced their commissions to brokers.
Therefore, this has forced many brokers to seek new ways of generating an income for the first time. For a large number of brokers, this has meant that they have needed to start charging fees to customers.
According to Denny and Associates Inc.’s Kelly Rector, “I feel really bad for having to do this.” However, she pointed out that “We can’t work for free.” She has been an insurance broker for a quarter of a century. She has never charged health insurance client fees before. That said, Rector is far from unique in this situation. A rapidly growing number of brokers are taking this same step.
Insurance brokers throughout Massachusetts are finding themselves in the same situation.
Many are pointing at the lack of competition in the health insurance exchange. For instance Cigna is the only HealthCare.gov carrier that offers BJC HealthCare doctor and facility in-network access. That insurance company is no longer offering commissions to brokers.
Another large HealthCare.gov carrier in the state, Anthem Blue Cross Blue Shield, has continued to offer commissions. That said, those commissions are notably lower and have been reduced to a set per-application dollar amount. Previously, brokers benefited from per-person commissions. Therefore, when larger families obtain their coverage in one application, commissions are only a fraction of what they had previously been.
Furthermore, the amount of time required to adequately advise clients is rising. Insurance brokers find themselves assisting clients who are changing their health plans with each passing year. As each plan offered by each insurer is quite different, additional time is required to ensure that a client is adequately informed. Therefore, brokers find themselves charging fees to compensate for the added advising time combined with significantly reduced commission earnings.