In my last post, I talked about the hands free, or distracted driving, law that took effect on July 1, 2018. That law was probably the most widely publicized new law passed by this year’s General Assembly and for good reason. However, there was another new law specifically affecting the sale of health insurance that was passed this year and that received hardly any publicity. It tries to do something about the increasing trend of health insurance companies not paying commissions for the sale of their products. Some agents I have spoken to about it are not that enthusiastic, due to its shortcomings, but I think it is worth discussing at least as a step in the right direction.
The law, HB 64 that will become new code section 33-24-59.23, requires that any insurance company licensed in Georgia to provide health insurance must pay its agents a commission for the sale and servicing of a “health benefit plan” for both the initial and any renewal term. To be eligible to receive such a commission the agent must review coverage and provide ongoing customer service for the plan sold. Unlike attempts in previous years to require the payment of a specified minimum commission amount, this law states the commission paid must be “consistent with the amount proposed in the rates filed with” the Insurance Commissioner’s Office by the insurance company.
This is the law’s first and most important shortcoming, as there is no requirement that the payment of a commission to agents be included in the rates filed with the Insurance Commissioner’s Office. Another problem is the exception to the commission payment requirement for any plan “sold during a special enrollment period.” This will exempt any policy sold outside of the Obamacare or an employer’s open enrollment period from the commission payment requirement. Any insurance policy that does not meet the statutory definition of a “health benefit plan” is also not subject to that requirement. There are many specialty insurance plans (credit accident and sickness, dental, vision, medicare supplement, hospital indemnity) that are not covered by that definition, as well as workers compensation insurance and statutory substitutes for it.
Although the new law on the payment of commissions for health insurance policies has many shortcomings, it does impose a requirement to pay a commission to agents in some instances. It would be a good idea for agents who sell or want to sell health insurance to check the ratings plans filed by their companies with the Insurance Commissioner’s Office to see if they contain language about the payment of commissions. If so, those agents should be prepared to point out the new law if their companies don’t pay the required commissions when the law takes effect. That will not happen until January 1, 2019 when it will apply to all policies issued or renewed on or after that date.