U.S. Senate Legislation Would Offer Limited Medical Loss Ratio Exemption for Agent Commissions

The following article wasa published in PropertyCasualty360º on January 27, 2012:

Senate Legislation Would Offer Limited MLR Exemption for Agent Commissions

By Arthur D. Postal

Revised legislation narrowing the proposed exemption of agent commissions from the healthcare reform law’s Medical Loss Ratio is being introduced in the Senate.

Officials of the National Association of Health Underwriters disclosed plans for the new bill during their Capitol Conference annual meeting.

NAHU CEO Janet Trautwein said at the meeting that the bill will have Sen. Mary Landrieu, D-La., Sen. Ben Nelson, D-Neb., and Sen. Johnny Isakson, R-Ga., as sponsors.

Another Republican is expected to be added as a sponsor, Trautwein said.

John Greene, NAHU vice president of congressional affairs, says the Senate bill will have several changes from the legislation exempting agent commissions from the MLR that was introduced in the House as H.R. 1206.

The Senate bill removes a provision in the House bill that exempts commissions on waivers provided through PPACA.

Additionally, it limits the carve-out from the PPACA MLR provision to health premiums for individual and small groups.

 In other words, commissions sold on large groups would not be exempt, Greene says. “The small group and individual market is where the action is,” he notes.

Moreover, the revised bill will not exempt bonuses paid by insurance companies to agents.

Regarding that last provision, Greene says, “We never intended bonuses to be exempt from normal administrative or marketing costs.”

“At the end of the day, the Senate bill accomplishes our objective of preserving [agent/broker] jobs and consumer access to agents and brokers,” Greene says.

House Speaker John Boehner, R-Ohio, also disclosed during a campaign talk at the meeting that the House plans to vote next week on legislation repealing the CLASS Act, or the Living Assistance Services and Supports program.

Boehner said in his speech that it was important to get it off the books even though Kathleen Sebelius, secretary of the Department of Health and Human Services, said last October that HHS experts had reviewed the CLASS program and could see no way to make the version of the program described in the statutes actuarially sustainable.

The CLASS Act would have created a voluntary long-term care benefits program, and was part of the healthcare reform law.

After the bill was voted on by a panel, Jesse Slome, executive director of the American Association for Long-Term Care Insurance, “I don’t understand why some members of Congress are wasting taxpayer money holding this markup when the CLASS Act was already removed….”

Slome added, “Wouldn’t their time be better spent addressing workable solutions to address the nation’s oncoming long-term financial crisis?”

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