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Covered California Q&A

Covered California and Obamacare related questions from consumers, employers and agents are answered by Phil Daigle with the best information available at the time. Archived entries may no longer be accurate as the Covered California and Obamacare knowledge-base is evolving quickly. TO REQUEST A PERSONAL RESPONSE INCLUDE EMAIL ADDRESS.


Effect of Health Reform on Brokers

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Question: What is the health care reform impact on California health care brokers?

Answer: California health insurance brokers and agents have already been negatively affected by health reform. One of the first provisions of the Affordable Care Act (ACA) was the Medical Loss Ratio (MLR) regulation which has reduced the commission rate for brokers in the individual and small group market by 30% or more.

In 2014, brokers may find themselves excluded from commissions in the individual Exchange in California. And while the Shop Exchange for small businesses will most likely want brokers to participate. the small group market may be decimated by the exclusive availability of subsidies in the individual Exchange causing many small groups to become collections of individual plans funded by defined employer contributions.

We at CAHBA believe that these forces will drive those brokers who wish to thrive in the post health reform world to adopt fee-based business models because individuals and employers will need guidance that goes beyond eligibility and enrollment assistance available at the Exchanges.

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