The Consolidated Appropriations Act, 2021 (CAA 2021) is a spending and coronavirus relief package that includes more than attention-grabbing elements like extra funding for public health programs, additional funds for unemployment benefits/displaced workers and a one-time payment to taxpaying Americans earning less than $75,000.
Buried in the depths of this new stimulus bill is a compensation disclosure section that’s a welcome change for the benefits industry.
The health agent and broker compensation disclosure section includes a bundle of health care price transparency provisions that appear near the end of the 5,593-page CAA 2021 document.
The comp disclosure section applies to a producer or entity expecting to earn more than $1,000 in direct or indirect compensation for selling or administering individual or group health coverage. This means brokers and benefit advisory firms are now required to disclose their compensation to employers or individual coverage holders. A practice that seems simple but unfortunately often ignored.
Ditching the Dirty Games
The insurance industry is no stranger to using lucrative commissions and bonuses as incentives for independent brokers who advise employers. From luxury island vacations to $150,000 bonuses, top-selling brokers have been able cash in big thanks to these long-standing business tactics. However, it’s the employers – and ultimately their employees – who end up paying for these luxe incentives.
According to a ProPublica article focusing on the insurance industry behind-the-scenes, “human resource directors often rely on independent health insurance brokers to guide them through the thicket of costly and confusing benefit options. But what many don’t fully realize is how the health insurance industry steers the process...enticements [like incentives and commissions] don’t reward brokers for finding their clients the most cost-effective options.”
“These industry payments can’t help but influence which plans brokers highlight for employers,” said Eric Campbell, director of research at the University of Colorado Center for Bioethics and Humanities. “It’s a classic conflict of interest.”
It seems we are bombarded weekly with ads from insurance companies like this one - offering a lucrative $30,000 incentive for bundling Anthem’s in-house PBM with medical administration. We’re doubtful that the client is ever aware of these influences.
Insurance industry payments to brokers are not illegal and have been accepted as a cost of doing business for generations. Requiring companies and individuals to disclose their compensation, however, will at the very least alert employers and plan sponsors to a potential conflict of interest.
Our Transparency Pledge
While insurers typically pay brokers a commission for the employers they sign up – a commission that is tied to premiums, so when the premiums increase, so does the broker’s commission – we do things different.
We believe in 100% transparency and ZERO conflicts of interest.
We believe commission arrangements and other conflicts of interest prevent you from seeing a clear picture. Simpara clients all receive our compensation disclosure statement upon engaging with us. Our clients can trust that we don’t rely on, or participate in, carrier commissions, bonus payments, overrides, or other hidden & seemingly conflicting forms of payment to actively manage your corporate health plan.
For a copy of our compensation disclosure form and agreement, contact us at info@simparahr.com.
To view the complete 5,593-page PDF file that contains the health agent and broker compensation disclosure, click here. Head to page 4475, Section 202 BB.
