(Business Report) - A new law directing health insurance companies, agents and brokers to disclose their commissions has been in effect for more than a month, but the rules about how to comply still are not available.
Ronnell Nolan, the Baton Rouge-based president and CEO of Health Agents for America, solicited help from Louisiana’s congressional delegation last week to get clarity on the requirements.
“The client deserves to see what the commissions are,” she says.
The Employee Retirement Income Security Act already required compensation to plan service providers to be “reasonable.” The Consolidated Appropriations Act of 2021 requires that group health plans disclose compensation of $1,000 or more to any broker or consultant. Failure to do so would mean that the contract is not deemed reasonable, according to the Society for Human Resource Management.
The Centers for Medicare and Medicaid Services is expected to issue rules but hasn’t yet, Nolan says. Department of Labor officials have said agents can rely on previously issued rules regarding the financial sector, though Nolan has some reservations about that.
“Stocks are not the same as health insurance policies,” she says. “That’s why it’s a bit ambiguous for our industry to make sure we’re doing it exactly as we’re supposed to.”
Nolan says the law indicates insurance companies are supposed to disclose commissions, though she says at least one major insurer has put the onus on agents. She says her organization has partnered with a law firm to create a disclosure form based on their read on the law, and the form could be tweaked later if necessary.
Based on the financial sector rules, penalties for nondisclosure in group policies would be $100 per day per group, Nolan says. She says the commissions generally are “miniscule,” and she’s glad consumers will know that going forward.
By David Jacobs
January 31, 2022
