PPACA Agent Comp Bill Surfaces in Senate
- Thread starter xrac
- Start date
I still don't see how this will change our commissions, instead, it will only increase insurance companies profit margins on the books. There still isn't any extra money to go around, it's not like they have an extra pot of money lying around somewhere else to pay us higher commish.
- 8,448
If companies don't have to include agent's compensation 15%/20% allowed admin overhead, the companies that truly value agents for generating new sales would have the financial ability to pay us more. That is, if these companies are still in business come 2014. It's looking more and more like 90% of the carriers will be forced to leave the major medical field. The household name biggies like BCBS of Illinois would probably use any MLR relief to either lower the premiums a bit and advertise even more. Agents will probably not be needed. They barely need us now.
If an insurance company takes in $100 in premium, they must spend $80 on medical claims, leaving $20 for everything else including agent commissions the way it is now.
If commissions are not part of the MLR, they are still taking in the $100 of premiums, and still have THE SAME extra $20 to allocate accordingly.
If commissions are taken out of MLR, and they return it to the client in the form of lower premiums, then new premium would be $95 with $76 to spend on medical claims, with only $19 leftover.
We lose in every scenario
If commissions are not part of the MLR, they are still taking in the $100 of premiums, and still have THE SAME extra $20 to allocate accordingly.
If commissions are taken out of MLR, and they return it to the client in the form of lower premiums, then new premium would be $95 with $76 to spend on medical claims, with only $19 leftover.
We lose in every scenario
- 8,448
You're assuming that the insurance companies will lower their premiums if agent commissions are removed from admin expenses. I have no doubt that Blue Cross (here in Illinois) will do that and also advertise more. However, the companies that want more momentum, to keep Blue Cross from taking the entire pie, would probably bump up their commission rate a notch or two.
- 2,455
I think there will be commissions to be paid BUT the real commissions or real money is going to go to big producers and successful agencies.
The lone agent out there pushing a few policies every couple of weeks or so is either gonna die on the vine or is dead already and their motive for work is just to stay active. But this is the reality now. Agents who choose to go to work will make money and those who don't will struggle but for agents to go the way of the Do Do Bird doesn't make sense to me.
I didn't think travel agents existed anymore until recently. Realtors too. They do exist but they are the ones who actually work. The others moved on to other career paths or are living in a van down by the river.
The lone agent out there pushing a few policies every couple of weeks or so is either gonna die on the vine or is dead already and their motive for work is just to stay active. But this is the reality now. Agents who choose to go to work will make money and those who don't will struggle but for agents to go the way of the Do Do Bird doesn't make sense to me.
I didn't think travel agents existed anymore until recently. Realtors too. They do exist but they are the ones who actually work. The others moved on to other career paths or are living in a van down by the river.
- 8,448
Just a rumor, but would anyone be terribly upset if Insurance Companies do not take into account the Federal Subsidy when calculating the commissionable premium?
-ac
-ac
Yes. It's funds paid in, just like when an employer pays a contribution. It's not an additional risk like a rate-up.
Now, if they want to pay a very high percentage on unsubsidized premium in order to get the higher-income folks (who have lesser risk), then I can understand, but it has to come out to fair compensation. I'm not sure they can even do that according to exchange rules that require matching commission inside the exchange and outside.
Otherwise, a rumor like that is just meant to find out how little agents will settle for.
- 9,744
This train left the station a long, long time ago. Those not able (or willing) to adapt will be left to scramble for the crumbs.
Hoping against hope ain't much of a strategy - or business model!
