On June 7, the Centers for Medicare and Medicaid Services (CMS) released a list of Frequently Asked Questions (FAQs) regarding compensation paid by issuers to agents and brokers who assist customers with enrollment during a Special Enrollment Period (SEP) or during Open Enrollment Periods (OEPs).

In releasing these FAQs, CMS notes that it “has become aware” that some insurers offering coverage through the Affordable Care Act (ACA) exchanges have reduced or eliminated commissions and other compensation for agents and brokers who assist consumers with enrollments during SEPs.

The FAQs clarify that issuers who pay agents and brokers who assist with enrollment during SEPs reduced or no commissions but pay higher amounts for OEP enrollments for the same benefit year “violate the guaranteed availability provisions of the Affordable Care Act.”

The guaranteed availability provisions in section 2702 of the Public Health Service Act, as added by the ACA, generally require issuers to accept “every employer and individual in the state that applies for such coverage.” This applies to issuers offering non-grandfathered health insurance coverage in group or individual markets, through or outside of the marketplaces. As implemented in the individual markets, insurers are required to guarantee issuing coverage during the annual OEP as well as during an SEP to an eligible individual.

According to CMS, “Issuers commonly use agents and brokers as an important part of their marketing and sales distribution channels. The way an issuer structures its compensation to agents and brokers influences the marketing to, as well as the enrollment and retention of, individual market consumers.” The agency adds that, “An arrangement that reduces or eliminates the commission or other compensation an agent or broker receives for SEP enrollments compared to the commission or other compensation received for OEP enrollments in the same benefit year discourages agents and brokers from marketing to and enrolling individuals eligible for an SEP.” CMS clarifies that “These practices there violate the guaranteed issue protections afforded to these individuals under the statute.”

As the largest professional association representing individual insurance agents/brokers and financial advisors, NAIFA applauds this new guidance from CMS, which will ensure that consumers have access to the plans that best fit their needs and that agents and brokers are fairly compensated for their work.

If you have any questions regarding this new guidance, CMS recommends reaching out to the Center for Consumer Information and Insurance Oversight (CCIIO) at MarketReform@cms.hhs.gov.