Late, partial Obamacare commissions cause agent headaches

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If the controversial beginning to healthcare reform has proven anything, it’s the continuing value of independent insurance agents and brokers. In California alone, 80% of enrollment in the state exchange was generated by producers.

However, that validation isn’t enough for many in the industry. Less than 20% of surveyed agents and brokers told consulting firm Oliver Wyman servicing individual policies through the state and federal exchanges was worth it.

One of their top grievances? Late, missing or partial payments from health insurance carriers still waiting to be paid by the federal government.

 “Agent compensation on the exchange is based on the premium the insured has to pay, as well as the amount of premium assistance that may be provided by the government to help lower the insureds’ out-of-pocket costs,” explained National Association of Health Underwriters spokesperson Neil Crosby. “The insurers have not received the premium assistance from the government yet for those insureds’ premium assistance portion, so they’re not going to pay the agent compensation on that portion.”

The commission delay is affecting producer across the nation, including in states heralded for their successful public exchanges. Washington state’s Washington Healthplanfinder is no different, says Olympia-based agency owner Dan Eich.

“I haven’t even been paid for any of the cases that have gone through the state,” Eich said. “People say good things about Washington Healthplanfinder, and that’s a really sad commentary on what’s happening to the rest of the nation.”

In Orange County, Calif., Patrick and Joann Freeman of Freeman Insurance Services are also “waiting on Uncle Sam” to pay carriers like HealthNet, Blue Shield and Kaiser so that they can collect full commission on plans they sold.

Until then, it will be difficult for the Freemans to ascertain whether their efforts to expand their book of business through Obamacare were worth it.

“The carriers say ‘you’ll get paid when we get paid,’” said Patrick Freeman. “We know we’ll get paid eventually, but I’m guessing we’ll probably spend a good part of April just cleaning up the mess and making sure all our commissions come through.”

Freeman said he doesn’t think agents are “really complaining” about the delayed and partial commissions, but for some agency owners, the holdup makes it difficult to make payroll.

“The commission payments have been late the last two months, and it’s a little hard to track. It’s a disruption,” said Colleen Callahan, who runs Colleen Callahan Insurance Services in the Bay Area. “It would be one thing if it was just me, but I have five staff people and I have to make payroll every month.”

Callahan said she prefers to pay directly from current income, but thanks to the delayed commission payments, she’s had to transfer income from savings.

 “Participating in the exchanges has been rewarding from the standpoint of serving people who are deserving and needing of help, but that payroll date comes no matter what,” she said.

Unfortunately for Callahan and other independent agency owners, neither carriers nor the government has signaled when they will pay premium assistance and agent commissions in full.

“We just don’t know at this point when the government will catch up and distribute the premium assistance to insurers at this point,” Crosby said. “I think that’s happening across the nation.”

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  • Jim Ezersky on 3/10/2014 2:34:22 PM

    This isn't news- I'm in Oklahoma, and haven't been paid one single dollar for any sale yet. typical Fed behavior. Surprised?

    They will eventually HAVE to pay it, but just like CMS Claims which can run well over a year to settle, the Feds can do whatever they want, and NOT be subject to ANY "Accountability or Responsibility."

    It's the Obama Way, of course. If a private insurance company acted the same way (huge claim delays or huge compensation delays) they would be kicked out of the States where these transgressions occur. Not the Feds.

    If you think this situation is chaotic now, just wait until next Fall's open enrollment, of all of three weeks, where it's being siphoned into CMS, along with the identical periods of open enrollment as PDPs and MAs.

    Stupidity and Inexperience on display., You gotta love it- y'all voted him in, now live with it.

  • Todd on 3/10/2014 3:03:30 PM

    Isn't kind of foolish for licensed agents to be working to place people on the state exchanges? It seems to me that you are helping the government take control of the health insurance marketplace. When, not if, the ACA implodes and we end up with a single payer system those of you who helped sign people up on the exchanges helped put yourselves out of work.

  • Maria on 3/10/2014 4:58:35 PM

    You are absolutely correct!. I don't sell it unless I am asked. I am not promoting it.
    I have been working on one case since 10:30 am because husband and wife do not want the same plan so I need to enroll them separately. Covered CA could not tell how to do it on one application. Their response was it has been an ongoing error but it is supposed to work. This one is for FOX news.

  • Todd on 3/10/2014 5:08:26 PM

    Maria, why do you waste your time on the exchange or are you required by CA law to write policies on the exchange?

  • Maria on 3/10/2014 5:50:46 PM

    If they want a subsidy, it must go through Covered CA.

  • Evan on 3/10/2014 5:54:35 PM

    Todd, many clients do qualify for subsidized coverage and it is appropriate to quote the exchange. IF we go to Single Payer coverage, then I'm relatively confident that we will have to adjust to a system where wealthy clients still seek coverage outside the they do in Germany, England.

    Most of my wealthier clients will not be on the exchange regardless...but if a client can qualify for a subsidy or Medi-CAL for themselves or their child(ren), and its in their best interest to go there, I'm going to do my job and help them to get the coverage after making an informed decision. I do have concerns over privacy/ security of the information on the exchanges...

  • Maria on 3/10/2014 6:48:39 PM

    I just enrolled a client off the exchange direct with Anthem BC and received a Broker Copy sent to my subscriber thanking him for his application and telling him there are other options under Covered Ca. Why are they steering subscribers from Off exchange plans to Covered CA. wouldn't you think if he was eligible for Covered CA, he would have told me and I would then have enrolled in Covered Ca?
    Anyone else experiencing this from Anthem BC?

  • John on 3/15/2014 9:38:03 AM

    Maria, I've got an even better one on BCBS here in FL. I signed up a client on the FFE back in early December. Since at that time the FFE wasn't transmitting all the applications to the carriers properly, CMS suggested that everyone that signed up to call the carrier directly to confirm that their enrollment was received. My client did that, and the agent at Blue proceeded to REWRITE the app with their producer#. I discovered this when the client called me when they received their insurance cards and wanted to know why another agents name was listed as "their agent".

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