nolaagent
Expert
- 61
Are our current books of business safe from the impending commission cuts? Or are most carriers making their new 2011 commissions schedules only effective on new sales?
Current Book of Business Safe?
- Thread starter nolaagent
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- 4,707
Usually, changes in commission structure apply to new business going forward. Old business is grandfathered. At least that is what I have seen on my all my health carrier's commission statements these past 32 years. I have never seen a change in commission structure apply to prior written business.
Of course, never say never.
Of course, never say never.
Everything I have read states they have to adhere to the original contract on past business. It's been a main concern being expressed by NAHU and NAIC to the HHS about insurers having existing contracts with brokers on existing business which cannot be broken, and need to be considered when calculating the MLR
- 1,459
I think the biggest threat to a current book is the tax subsidies. If I have a grandfathered plan, but it's less out of pocket to go into the exchange with the subsidy (even though the total cost is greater), then your book will migrate that direction. My best renewal checks are in the small group arena, I'm curious how that will shake out as well. I'm not going to lose sleep over anything I can't control, time will tell, full speed ahead.
- 4,096
What I have seen from Anthem is the old business stays on the original comp schedule.
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nolaagent
Expert
- 61
Well I was reviewing my producer contracts last night and it says that they can change commission schedules with "xx" days notice", but it doesn't specify if the new commission schedule would be new business only or new and existing business. Another thing to worry about.
- 3,384
My understanding this morning from talking to Anthem CA is that it will apply to all business currently on the books and the reduction in commission will be fully retroactive to the original start date of the policy. All agents will receive retroactive chargebacks for adjustments to the lower commission levels for the life of the policy.
OK, just kidding It's Friday and Halloweenie weekend!
Commission changes only apply to new business not to existing business.
OK, just kidding It's Friday and Halloweenie weekend!
Commission changes only apply to new business not to existing business.
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- 3,863
It varies on the company. There are plenty of companies if you sell a policy today at 20% commission they are NOT guaranteeing first year commissions past 1/1/11.
If a carrier blocks the old business (most do), and client does a plan change or re apply, you lose the old commission rate as well. Unfortunately you are going to see some pretty ugly "blocking" moving forward is my guess - as you have PPACA and non PPACA plans.
If a carrier blocks the old business (most do), and client does a plan change or re apply, you lose the old commission rate as well. Unfortunately you are going to see some pretty ugly "blocking" moving forward is my guess - as you have PPACA and non PPACA plans.
- 14,809
Agreed. Carriers are going to deem policies issued post 5/10 as "new" and anything sold before that as "old." Look for insane rate increases over the next two years on existing blocks.
I feel a majority of our existing book of business (80%) will stay on the books for the following reasons:
1. Grandfathered policies are cheaper than reform ready policies, and will have reduced pressure to raise rates without the mandates. Only those with 3+ years of rate increases could maybe find a competitive plan/rate in the current marketplace. So far, after running analysis for the client, I'm finding it's best to stay on current plan.
2. The exchange subsidy available won't impact most of your business either. Have you used the reform subsidy calculator on the Kaiser website??? healthreform dot kff dot org / subsidycalculator. First, I'll assume that most of your book of business is middle to higher income (not the lower income "I can't afford that" crowd). Second, the cost of an exchange policy even with the subsidy is HIGHER than most of your current policies.
For example - family of 4, age 41 in medium cost area making $70,000 combined income (MAGI), would cost $12,348 with $5722 in subsidies = $6626/year final cost. I pay $4524/year currently for my HSA plan.
Most people plan on making more money in the future. As you change the numbers, it gets pretty crazy as the income goes higher. It turns out that for every dollar you make, at least 10% or MORE will go to insurance. Make $90,000 MAGI joint income and you get $3580 in subsidies. Make $95,000 and you get NO subsidy. $3580 of that extra $5000 you just made went to health insurance.
Oooooh, I can't wait to make more money, so many incentives as you can see.
So, the answer is....it depends.
1. Grandfathered policies are cheaper than reform ready policies, and will have reduced pressure to raise rates without the mandates. Only those with 3+ years of rate increases could maybe find a competitive plan/rate in the current marketplace. So far, after running analysis for the client, I'm finding it's best to stay on current plan.
2. The exchange subsidy available won't impact most of your business either. Have you used the reform subsidy calculator on the Kaiser website??? healthreform dot kff dot org / subsidycalculator. First, I'll assume that most of your book of business is middle to higher income (not the lower income "I can't afford that" crowd). Second, the cost of an exchange policy even with the subsidy is HIGHER than most of your current policies.
For example - family of 4, age 41 in medium cost area making $70,000 combined income (MAGI), would cost $12,348 with $5722 in subsidies = $6626/year final cost. I pay $4524/year currently for my HSA plan.
Most people plan on making more money in the future. As you change the numbers, it gets pretty crazy as the income goes higher. It turns out that for every dollar you make, at least 10% or MORE will go to insurance. Make $90,000 MAGI joint income and you get $3580 in subsidies. Make $95,000 and you get NO subsidy. $3580 of that extra $5000 you just made went to health insurance.
Oooooh, I can't wait to make more money, so many incentives as you can see.
So, the answer is....it depends.
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