Can an Agent Be Paid a Fee for a Personal Lines Health Insurance Policy?

In the past couple of weeks, I have received telephone calls through the IIAG Free Legal Service Program that I run in which I have been asked the above question.  My general answer is Yes, if certain conditions are met, but there is one large exception that I will discuss below.  Those conditions are (i) the agent must have a counselor’s license for life, accident, and sickness insurance and (2) ) the insurance being placed can only be issued without the payment of a commission or the issuance of such insurance without the payment of a commission has been approved by the Insurance Commissioner in a rate filing, rating plan, or rating system.

The above questions were prompted by the decision of many health insurance companies to stop paying any commissions on individual and family health insurance polices.  A fact that has gotten the attention of at least six Georgia legislators.  Representatives Shaw Blackmon, John Meadows, Bubber Epps, Trey Rhodes, Richard Smith, and Chuck Efstration have co-sponsored a bill in the House of Representatives, HB 838, that will mandate the payment of at least a 5% commission for the sale of a group health plan by an agent and at least a 4% commission for the sale of an individual health plan.  These minimum commissions would be required for each renewal of such a plan as long as the agent “reviews coverage and provides ongoing customer service for such plan.”

HB 838 was passed by the House of Representatives on February 24, 2016, but has sat in a Senate committee since then.  The bill has two exceptions to the requirement to pay a minimum commission on the sale of health plans.  No commission would be owed for the sale of an individual health plan during a special enrollment period or for the sale or renewal of a group health plan to an employer who has “more than 50 bona fide employees on at least half of its working days.”

The above exceptions may have something to do with the regulations that govern Obamacare, which leads me to the large exception to my general Yes answer to the question posed in the title of this post.  Although not crystal clear on this point, those regulations seem to prohibit agents from charging a potential insured for services related to assisting the insured in obtaining a health insurance plan through a marketplace exchange that is run by the federal government, which is the case in Georgia.  Those regulations contemplate that any compensation received by agents for such services will be paid in the form of a commission by the insurance company that issues the policy obtained through the federal marketplace exchange.  The regulations specifically prohibit Navigators from charging a fee to the potential insured for providing help with the federal marketplace exchange and state that any “non-navigators” who give such assistance are subject to the same prohibition.

Even if HB 838 is passed by the Senate and signed by the Governor, the above federal regulations will take precedence over any contrary state law.  It appears the best hope for agents who want to help their customers with obtaining health insurance plans through the federal marketplace exchange will be to amend the provision of Obamacare that lumps in the commissions paid to agents with other administrative costs of the health insurance companies.  There are bills pending in Congress that do this, but unfortunately they do not seem to be getting anywhere.