Commissions Affected by Health Care Reform in Under-Age Insurance Market

FOR IMMEDIATE RELEASE
(Free-Press-Release.com) January 17, 2011 -- As part of the new health care reform law that went into effect January 1st, a Medical Loss Ratio (MLR) was instituted stating insurance companies must spend at least 80% of premiums on medical expenses, with the remaining 20% being shared with administrative costs.

These new health reform rules will cut insurance brokers’ pay by 50% in some cases, effecting nearly 470,000 under-age market agents. Reports show commissions will drop from 15 to 20% on plans to 4 to 10%; and, for Blue Cross which used to pay 15% on the first year and 7% on residuals the following years will now pay 5% for both. Meanwhile, Golden Rule, owned by UnitedHealthCare is offering their brokers a per application bonus, understanding the cuts in commissions.

By 2014, even without the MLR regulations, consumers will be able to find and obtain health insurance plans easily on their own. Under new health care regulations insurance agents, negotiating rates for those with preexisting conditions will be unnecessary. Health insurance companies will no longer be able to deny coverage based on conditions; therefore, making under-age insurance agent less and less vital for sales.

Also in 2014, almost 32 million Americans will have insurance under the health care laws and MLR will negatively impact the way the public uses health care, with potential job loss due to lower commissions at a time when consumers need the most help because of all the changes.

Critics argue smaller companies may go out of business, agents will see more cuts in compensation, and there will be reduced service quality to the consumer. Supporters say that industries are always changing and compare the change in the insurance industry to that of travel agents. Even though a lot of people buy their travel arrangements unassisted online there is still need for a travel agent. Now under-age insurance agents will just have to find their niche in the new insurance environment.

Senior market insurance and Medicare Supplements has not be affected by these changes. Lucas Vandenberg president of Precision Senior Marketing (http://www.psmbrokerage.com), an insurance marketing organization specializing in the senior market, stated “The decline in commissions in the underage market has agents concerned about their future. That is why it is so important for these agents to consider diversifying their portfolio to focus on the exploding Senior Market. PSM specializes in helping agents make this transition.” Products like Mutual of Omaha, Forethought, Gerber Life, and Sentinel Life all have excellent commissions, ultra competitive premiums, Med Supp/Life combo applications, e-applications, top level service and support, and up to 12 month advancing available.

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