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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