Humana Commissions

[Yagents]

1. They are paying 10% first year now, and have met the 80% MLR. Higher premiums = higher revenues = higher margins for paying the 10%

2. Lower pricing will attract more people and spread the risk

3. IRS reimburses premium tax credits and Cost sharing to the carriers every month. The only thing that might be reimbursed at the end of the year is the risk corridor adjustments. Fees are being charged, to be redistributed to carriers who end up with the higher risk clients.

 

[ctg]

The Blues here in Iowa said our commission would remain the same. They are not participating in the exchange until 2015. The bean counters decided they will lose money either way if they were in or out, so they'll let others conduct the experiment.

To djs's point, they have a ton of reserves, and I think they are looking to come out on the other end looking better than if they jumped right in.

 

[somarco]

FYC commission is usually amortized over 3 years. They work off actuarial assumptions factoring in how much is agent driven, how much direct.

Ned, was Doug Teff or Bob Gailunas there, or perhaps both of them?

 

[bluemarlin08]

I got there a little late and had to leave early. The district guy was from Memphis.

 

[AllenChicago]

Allen, I'm in Chicago & Midwest Insurance Brokerage Services told me that it will be 10% on everything. I use BCBS & Humana with them. I've put the email on a previous post & I spoke to them personally. But on the flip side we won't know until we see it in writing.

Sam, thanks for confirming what I've heard from 2nd party sources. I use EBRM (Oakbrook, IL) for BCBS. Your Midwest Insurance Brokerage master agency seems to be more "in the know" on these ACA issues, and they willingly share what they know even with non-contracted agents when we call. EBRM isn't holding their first ACA-related agent seminar until August 29th. Thanks again.
ac

 

[stuy119]

Remember, the carriers can operate at a loss since they will be reimbursed for the first couple of years. In the meantime, they'll collect all the data (email, phone, address) of everyone they possibly can.

Then, a few years down the road, they'll cut commissions to the bone (when the reimbursements for losses dry up) and try to go it alone.

I mean, that's what I would do if I were running their show.

 

[somarco]

Carriers will be reinsured for losses, kind of. There is a federal risk pool that will be divvied up among carriers based on market share. The pool is designed to offset some of the potential loss on the claim side.

It has no impact on commission or overhead.

 

[djs]

FYC commission is usually amortized over 3 years. They work off actuarial assumptions factoring in how much is agent driven, how much direct.

Good point, but I assume this is simply internal accounting to deal with 'marketing' costs.

Does ACA allow them to amortize this over 3 years? Honestly, after year 3, it would no longer matter, just curious if ACA accounting will allow for it. It would be the only way I could see 10% even being close to reality.

Dan

 

[RayNY]

Carriers will be reinsured for losses, kind of. There is a federal risk pool that will be divvied up among carriers based on market share. The pool is designed to offset some of the potential loss on the claim side.

It has no impact on commission or overhead.

The potential impact is that a carrier could operate at an actuarial loss in order to give bigger commissions, and then be made whole again by payments from the risk pool, as insinuated by Stuy.

The issue with this is that it's an offset and dependent on market share, they never will be made whole, just have their losses reduced. It's a really risky strategy.

 

[FLM2]

1. They are paying 10% first year now, QUOTE]

They are actually paying more than that through their distribution network of IMO's-I work through one of the larger ones and get 12% with 4% renewals, it has been this way since March, 2010.