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State sets fees for insurance brokers involved in health care exchange

first_imgby Andrew Stein July 19, 2013 vtdigger.org The state will allow insurance brokers in the state’s new health insurance market to charge $20 per person, per month. Health officials plan to dole out $2 million in federal money to subsidize small businesses that want to use a broker.On Jan. 1, 2014, it will become illegal for health insurance companies in Vermont to bake broker fees into their rates.For years, health insurance premiums included fees for agents who sold health insurance, regardless of whether a health insurance consumer used an agent. Insurance companies paid agents based on commission, or the amount of insurance the broker sold. Act 171, which passed the Legislature in 2012, will do away with the practice for the state’s new health insurance exchange, called Vermont Health Connect.‘We think the commissioner really took the public comment period to heart and gave it thoughtful consideration and understood the economic impacts of what it would mean for the brokerage community and consumers in Vermont.’Mary Eversole, Vermont Insurance Agents AssociationLegislators decoupled broker fees from premiums for the new market in an effort to prevent cost shifting and make insurance fees more transparent.In 2014, the exchange will become the sole health insurance marketplace for more than 100,000 Vermonters who purchase insurance individually or through a small business with 50 or fewer employees. In this market, brokers won’t sell insurance; they will advise customers. Instead of earning a commission, agents will receive a $20 fee set by the state, which customers will pay.Originally, the Department of Vermont Health Access proposed a $15 per person monthly charge for 2014. But the department met resistance from the Vermont Insurance Agents Association, which called for a $22 fee.‘The challenge was that if we went too low, brokers would back out and we would lose access to their support. If we went too high, small businesses wouldn’t pay,’said Mark Larson, commissioner of the department.In the end, the parties agreed on the $20 monthly charge, and Mary Eversole, director of the association, said her members are satisfied.‘We are very happy with that outcome, considering where we left off with that original proposal,’Eversole said. ‘We think the commissioner really took the public comment period to heart and gave it thoughtful consideration and understood the economic impacts of what it would mean for the brokerage community and consumers in Vermont.’Larson said the insurance association was the only entity to submit a recommended rate that was different from what his department proposed.Robin Lunge, director of health care reform for the Shumlin administration, said it is important to have brokers on board with the exchange, though they won’t be selling insurance.‘People are used to using brokers. For someone who hasn’t paid attention and is waking up to the fact that maybe they should learn about this, they are going to go to their broker first because that’s whom they are used to dealing with,’she said. ‘I think it’s in everyone’s interest to make sure that system is working well.’The state is offering $2 million in subsidies to small businesses that want to use broker services in the first year of the exchange. Larson and Lunge have not yet determined what percentage of those fees the state would fund. That decision should come in the next month or two, they said.The state has also paid more than $2 million to organizations offering free guidance for Vermonters who are buying insurance on the exchange.More than 170 so-called ‘navigators’recently received training to help Vermonters understand the exchange. Open enrollment begins Oct. 1.- See more at: http://vtdigger.org/2013/07/19/state-sets-fees-for-insurance-brokers-inv(link is external)…last_img

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