New federal health insurance regulations released yesterday by HHS, provide clarification for the role of brokers in the Exchange. Brokers will be allowed to direct people to state insurance exchanges and check to see if they are qualified for tax credits or premium subsidies.
This confirms a new business model for insurance brokers looking to set up web-based access points to the state insurance exchanges. Eligibility for determining the premium tax credit is going to be done by the Exchange, but a web-based broker will be allowed to interact with consumers on the Exchange in an automated way.
The federal government will not regulate how insurance brokers charge and collect fees. How brokers will be compensated for bringing business to the exchange will be regulated at the state level. Some liberal-leaning states and groups did not want brokers assisting the low-income people who will qualify for government subsidies, because the brokers’ fee could increase the cost of premiums.
The regulation received a warm welcome from the pro-health reform community, but other industry groups gave the regulations a cautious welcome. “This rule recognizes that states are in the best position to establish exchanges because they have the experience and local-market knowledge needed to best meet consumers’ needs,” said America’s Health Insurance Plans CEO Karen Ignani. She said AHIP would need to continue to review the regulations.
Janet Trautwein, CEO of the National Association of Health Underwriters (NAHU) said, “The devil - as ever - will be in the details, and we will have a lot to read…On the surface, we are encouraged by the rule’s focus on flexibility.”