The National Association of Insurance Commissioners (NAIC) recently passed a resolution asking Congress and the U.S. Department of Health and Human Services to relax the medical-loss ratio (MLR) requirement of the Patient Protection and Affordable Care Act.
This provision mandates health insurers in the individual and small group market devote 80 percent of their premiums to covering medical costs, raised to 85 percent for those in the large group market.
The NAIC contends the provision has, in practice, resulted in significant cuts in agent and broker compensation, defined as a non-medical expense. The organization and others, including the National Association of Insurance and Financial Advisors (NAIFA), have indicated these cuts are forcing agents and brokers to reduce the amount of time they spend providing services and assistance to clients.
"If the MLR formula is not corrected soon, consumers will suffer the prospect of losing the professional, licensed guidance of insurance agents during this time of great change in the health insurance market," said Robert Rusbuldt, president of Independent Insurance Agents & Brokers of America.
The NAIFA recently released survey results indicating 92 percent of respondents saw commissions decrease or would soon. NAIFA president Robert Miller noted health insurance agents and brokers commonly help companies and individuals understand and choose plans and coverage, and help with claims. These services, according to Miller, are not billed separately, but may not be possible in an environment of smaller compensation that the MLR provision promotes.
