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As commissions disappear, insurance brokers turn to fees, limit new clients

As commissions disappear, insurance brokers turn to fees, limit new clients

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For decades, insurance brokers relied on commissions paid by health insurance companies. But for individual health plans, that practice has changed recently: Carriers have either reduced commissions or eliminated them entirely.

So, for the first time in their careers, some area health insurance brokers are asking customers to pay fees.

Kelly Rector, of Denny and Associates Inc. in O’Fallon, Mo., is among brokers who have implemented a fee structure for health insurance customers.

“We can’t work for free,” she said. “I feel really bad for having to do this.”

Rector has been an insurance broker for 25 years and this is the first time she’s charged her clients fees. And she’s not alone.

“Almost every colleague I’ve talked to is now doing this,” said Ryan Hillenbrand, of Chesterfield-based Hillenbrand and Company Insurance Advisors.

The problem is multilayered, he said.

Brokers are no longer receiving commissions from Cigna, the only carrier on HealthCare.gov that offers in-network access to BJC HealthCare doctors and facilities. And Anthem Blue Cross Blue Shield, the other carrier on HealthCare.gov in the St. Louis area, has cut its commissions to a flat dollar amount for each application, instead of per person, drastically reducing the commission for larger families.

Complicating matters, many of the brokers’ clients don’t stick with the same health plan from year to year. And the networks of providers offered by insurers are drastically different. So it takes an extensive amount of time to counsel each client, Hillenbrand said.

Last year, Hillenbrand said his office spent, on average, four hours with each client.

And for now they’re expected to do that for no or very little commission, he said. “At some point in your business, you have to figure out what it is that you’re worth.”

Timothy S. Jost, a law professor focused on health care at Washington and Lee University, said it was unfortunate that carriers had decided to step away from commissions. He thinks it’s short-sighted on insurers’ part.

“The people who really, really need insurance are going to get through,” Jost said. But, now, the carriers are cutting off their producers or the ones who could help them attract younger, healthier members.

The bottom line is that consumers are going to get less professional help, said Ted Ruzicka of Ruzicka Group Services of Creve Coeur.

Ruzicka said he was not charging fees; instead, he’s going to largely step away from the individual health-insurance business.

“It’ll be a lot less focus,” he said. The individual business makes up 10 percent of his income, but he can make that up elsewhere.

A spokesman from Cigna said the reality was that individuals didn’t necessarily need to use brokers to buy coverage.

“The information and decision support tools consumers need to select a plan on the exchange are available at no cost on HealthCare.gov,” company spokesman Joe Mondy told the Post-Dispatch via email.

But there are other resources. Through grants, the federal government supports individuals with certain certifications to assist consumers with HealthCare.gov coverage. However, they do not receive commissions.

The Missouri Department of Insurance, Financial Institutions and Professional Registration said it did not have any authority over the commissions brokers receive from insurance companies. But brokers are allowed to charge fees in the state of Missouri, so long as the consumers agree to them.

Samantha Liss • 314-340-8017

@samanthann on Twitter

sliss@post-dispatch.com

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