Every insurance agent that writes health insurance and employee benefits has seen their commission drop this year as insurers begin to implement the MLR (Medical Loss Ratio) requirements of the Affordable Care Act.  This provision, which became effective on January 1 of 2011, requires insurance companies and HMO’s to report their payout of claims vs administrative costs.  Either the 80/20 or 85/15 rule applies, so that 85 or 80 percent of revenue must be paid out in the form of claims.

 As a result of this new provision, all insurance companies who market health insurance have reduced the level of commissions to agents, as HHS (Health and Human Services), the agency over seeing implementation of the law, has stated that agent compensation is an administrative cost.

 The National Association of Insurance Commissioners (NAIC) is considering whether or not it will support a new Congressional bill which would scuttle or change the parameters of the 80/20 rule and have commission to insurance agents and brokers not count as part of the reporting rules.  If no changes are made, the trend of agents deciding not to service or write health plans will continue, and make it more difficult for consumers to obtain quality information and service for their health insurance needs.

 There is a lot of support by the new Congress to modify MLR to make sure that agents remain a part of the health care process.  Senator Jay Rockefeller is the biggest name in the US Senate in favor of keeping the MLR provisions as is, and he is also supported by the AMA, American Medical Association.  NAHU, the National Association of Health Underwriters is working with Congress to have the MLR requirements changed.  For more information, please visit the NAHU website at www.nahu.org

As a result of the MLR, the Medical Loss Ratio requirement of the Affordable Care Act, more insurance carriers are cutting commissions.  Group insurance commissions which are very low for groups of 1-3 by all carriers were once thought to be as low as they would ever be, but this has now proven to be incorrect.  Aetna has lowered its commissions for groups of this size to $1.50 per month per employee.  This means groups of one pay $1.50 each month, $3 for a two person group, and $4.50 for a 3 person group.  Service requirements, and claims history are generally higher for these so called mini-groups, and finding an agent to continue to service their clients here without collateral business may now come to a halt, unless fees can be legitimately collected.

Every day agents receive many calls by their insured groups for various types of service. The public must be made aware of what could be even more across the board commission cuts by insurance companies.  With the advocate for the consumer out of the picture, the public is vulnerable to deceptive practices or just plain lack of good advice.  I am telling both insurance agents and the public that it is time to shake off your apathy, and become aware that this is a result of a portion of the Affordable Care Act needing improvement, and also that some insurance companies may just be looking for an excuse to lower overhead at the expense of the public.  The result is a short changing of both the consumer and the independent insurance agent.

Due to Medical Loss Ratio (MLR), many insurance companies that write individual health plans have not only cut commissions to agents and brokers, but are in many cases completely eliminating the middle man, which in the insurance business is the General Agent (GA).  Trying to eliminate either the agent and/or the GA usually backfires with a loss of market share by most insurance carriers.  The cost to advertise and have in house enrollers is still a cost to these companies.  Never the less, this is what is happening in the health insurance business as I write this.  The part of the Affordable Care Act that requires insurance companies to include agent’s commission as an administrative cost is the reason behind this.  Some of these companies may just be looking for an excuse to eliminate these costs, and regardless, this is the current practice being adopted by many insurance carriers.  For insurance agents that do not write a lot of individual plans, this will make writing them difficult, as they will have to team with other insurance agents and find ways to split commissions.   For any agents needing assistance, please contact us, and we will be happy to work with you to help you continue to assist your clients with individual coverage.

Regardless of the final out come of health insurance reform, if we as a society want  to keep costs under control, fraud must be vigrously attacked.  The link below is to a current story about the latest in the government task force crack down on fraud, and Florida plays a leading role.

http://insurancebroadcasting.com/2011/02/21/medicare-fraud-strike-force-charges-111-individuals-for-more-than-225-million-in-false-billing-and-expands-operations-to-two-additional-cities/

Due to the political landscape, the private health insurance market is in a state of  flux.  There were many positives to the Affordable Care Act as well as some items that need improvement.  As is typical in any market, there are the fly by night business people, and then there are those of us who are looking to do right by the public and to be there for our customers when servicing issues arise.

I received a fax today shouting, “FinallyAffordable Health Insurance!”  Let us shop for you, and we will furnish you with a FREE  no obligation quote.  Well, first of all, the phrase Affordable Health Insurance is ofen  today an oxymoron, and no insurance agent charges to quote.  Stark & Associates has been doing this for 21 years.  We know all of the types of plans that are available, and don’t just put together a bunch of numbers.  Like physicians, we diagnose the problem, and recommend a solution.  Sometimes it is affordable and sometimes it is not.  We tell it like it is.  So if you want the real scoop on anything related the Health Insurance, including Medicare, contact our office.

A word of warning to the numerous unwanted comments being sent our way.  Trolling to this site to post nonsense and promote your own blog which has nothing in common with this one is not appreciated.  Please don’t waste your time as the comments will not be published.

Most insurance agents develop an area of expertise after they have been in practice for a few years.  Almost immediately, I developed this expertise for the senior market place.  Today, this marketplace is growing in size because the Baby Boom generation is approaching age 65, the common age of retirement, and the age when Medicare is activated.  This coming year, the first birth year of the Baby Boom generation becomes age 65 on January 1, 2011, as 1946 is considered the first year of this generation.  The Baby Boom generation is marked from 1946 to 1964.

Despite the fact that Medicare is a socialized program, it is not necessarily easy to navigate.  Also, despite its tremendous cost to the nation, it does not pay for everything.  This is why Medicare eligible people purchase Medicare Supplement Insurance plans, also called Medigap plans, Medicare Advantage plans, and the new Part D prescription drug plans.

CMS, the Centers for Medicare and Medicaid Services, is the division of Social Security that administers Medicare, and writes the rules and regulations for the marketing of coverage plans.  In 2008, CMS announced new tough regulations on the marketing of Medicare Coverage Plans as a result of reported unfair business practices, including churning and high pressure tactics.  As is typical, a few bad apples made it bad for the majority of field marketing agents and brokers.  Since then marketing folks have become accustomed to these newer rules and regulations, and have done their best to abide by them.  Now in 2010, the rules are getting even tougher.  When I explain to seniors that I have to have them sign a form that they have agreed to meet with me, and that it has to be held in my office files for 10 years, they get a charge out of this and the myriad of  other regulations I tell them about.

Ok, fast forward to this coming enrollment season of 2010.  We have a scope of appointment form that has to be completed when we market Part D and Medicare Advantage plans.  That is what I was talking about in the previous paragraph.  This year, however, we have to have it completed in advance of the appointment, sent to the carrier before and after the sale, and then any written policy enrollment form has to be submitted within 24 hours.  This is only one area of the rules of engagement, and this is clearly restraint of trade. So then how do we assist consumers who want to purchase via computer, fax and phone, especially people outside our geographic area. The answer is not complete as of this posting, and this is not good for seniors as it makes it more difficult to make purchases with people they know and trust.

Is this what government control over insurance in the under age 65 market will bring?  I am not in favor of repealing The Affordable Care Act. I am in favor of modifying it.  We need some type of universal health care system, and guarantee issue of coverage, but too much intrusion of government is not good for the economy as it stifles trade.  I am urging my legislators that it is important to protect our consumers, especially seniors, but it is not good practice to let government agencies who know nothing about how to build and maintain a business, to write rules that will push independent agents like me, out of business and make it difficult for the public to find advocates who will shop the market and explain what their choices are.  The world is becoming more, not less, complex.

The freedictionary.com definintion of overregulation: To burden excessively with rules and regulations.

Most people after they finalize coverage for an insurance plan put the policy in the closet, and if there is an ID card that comes along with it, put it in their wallet or purse, and that is the end of it.  This is especially true of Health insurance.  When a medical service becomes needed, many people are then ignorant of what the plan covers, and often have a claims issue.  Here are some tips to gain maximum use of your Health Insurance plan.  Number 1, make sure you know who the contacted providers of Medical Service are.  Filing claims for service with non-contracted providers costs much more if it is out of network, and if you have a plan with in network coverage only, you will be SOL.  Number 2, set up your on line account.  Almost all health plans today have an internet presence.  With this service you can search providers, get a new ID card, track claims, order prescriptions,  etc.  Number 3, if you can, use the Urgent Care centers when possible.  These centers are everywhere.  Check your plan’s provider network to see where they are located.  They are much less expensive than Emergency Rooms.  Number 4, most plans have a nurse hotline 24/7.  If you are not sure its an emergency, call them. Number 5, and last for this article, avoid using outpatient services at the hospital unless absolutely necessary.  The same services at contracted facilities away from the hospital are much more cost effective.  This is for servieces such as MRI’s, Colonoscopies and lab work.

As in previous years, the Medicare Annual Election Period (AEP) will begin on November 15th in 2010.  Individuals who want to change their Medicare Rx plan or join one now if they had not previously done so, can. Changing from Original Medicare to Medicare Advantage or vice versa, is also allowed.  All changes must be completed by December 31, and then go into effect on January 1, 2011.  Previously, another change could then be allowed in the Open Enrollment Period (OEP) from January 1 to March 31.  In 2011 there will be a new enrollment period called (MADP), the Medicare Advantage Disenrollment Period lasting from January 1 to February 14.  During this period of time, anyone who joined a Medicare Advantage Plan and would like to disenroll and re-enroll in Original Medicare can do so.  For more information, please call our office or send me an e-mail.  www.starkinsurance.net

As a consumer, I am glad that many industries like insurance, accounting and law, require Continuing Education (CE).  There are times, however, that the intra industry education requirements become too overbearing.  Case in point, the education process for Medicare products.  Now this was never easy, but since MIPPA, the Medicare Improvements for Patients and Provider’s Act of 2008, there are now so many education requirements, that it is difficult to get out and maintain one’s business.  There were abuses within the sales of Medicare products that did not speak well for the insurance industry, but to make the sales process too burdensome is not correct either. Although I have certified to write AARP plans for the past 3 years, I still have to take at least 6 courses and exams, which is not part of the Continuing Education process for my state, Florida. It is ok to learn new things, but to expect this every year, is just not fair. Having to learn new products, or regulation changes is fair, but to have to retrain every year for the same items is not.  I don’t think anyone in any industry would sign on to training for the same thing year after year.  We need time in the field selling product or managing our business.  I am complaining here mostly about AARP, but I am also licensed with Blue Cross, Aetna, and Coventry.  Every year it is the same old. I think it is time for the industry and take a stance, and push for reform, and keep requirements that help weed out the bad guys, but allow us legitimate folks time to do business.