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Make Broker Commissions Pass-through Expenses in the MLR

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NAHU
​January 12, 2018

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Yesterday, Senators Johnny Isakson (R-GA) and Chris Coons (D-DE) introduced ​S. 2303, joining Representatives Billy Long (R-MO) and Kurt Schrader (D-OR) who introduced ​H.R. 4575 last month. These bills would remove independent agent and broker compensation from the definition of "administrative expense" from the Medical Loss Ratio (MLR) calculation. The MLR regulation has caused carriers to reduce the commissions of agents and brokers, which has led to a reduction in consumer access to crucial services provided by insurance producers on a daily basis. Treating broker commissions as a pass-through expense will protect jobs and preserve the critical role of agents and brokers and ensure that insurers would be better equipped to compete in the marketplace. 

NAHU has long advocated that the MLR should treat broker commissions as pass-through expenses for the following reasons: 

• ​Commissions are set by insurers but not paid by the insurers. Commissions are paid by the client and passed through carrier to the agent. While carriers currently collect agent compensation along with the regular premium, these funds are passed directly to the broker. 
  
• Commissions are paid to health insurance agents and brokers for the enrollment and on-going service they provide to consumers throughout the duration of their policy. 
  
• As a result of agent compensation being included in the cost of MLR, brokers servicing the individual and small business markets are seeing their compensation slashed by as much as 50%. 
  
• Individuals and employers across the country are relying on their health insurance agent to help them understand and comply with health reform for their business, their employees, and themselves. 
  
• The MLR has caused serious harm to the insurance market as it has inhibited the number of insurers willing to write health insurance in the individual and small-group markets. 
  

Contact your senators and representative. Send an Operation Shout today asking your member of Congress to cosponsor H.R. 4575 and senators to support S. 2303! You can also call your legislators at the numbers below.

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For questions, please ​contact a member of your B&P Sales Team - 888.722.3373.​