UnitedHealthcare has alerted their appointed health insurance agents that they will not pay any commissions for individual and family plans sold after January 1, 2016. The abrupt cancellation of commissions applies to Marketplace state based exchange plans and health plans sold off-exchange directly through UnitedHealthcare. Commissions on enrollments prior to December 31, 2015, will be honored.
UnitedHealthcare (UHC) made a big splash in the media back in November intimating that they might pull out of the Affordable Care Exchanges altogether for 2017. The L.A. Times reported that United Healthcare CEO Stephen Hemsley apprised analysts and investors that “we cannot sustain these losses…We can’t really subsidize a marketplace that doesn’t appear at the moment to be sustaining itself.” It appears the United Healthcare has found a way to reduce their expenses on the backs of health insurance agents.
Agent commission cuts reduces expenses
It makes one wonder if UHC’s alleged losses in the Marketplace exchanges was nothing more than pretext to cut agent commissions among potentially other areas within their health plans. They had already scaled back by their marketing and pulled online quoting and enrollment from their website for individual and family plans in California. This is similar to the Cigna who also pulled their online quoting and enrollment of their Silver, Gold, Platinum California plans. Similar to UHC, Cigna will pay no agent commissions their Silver through Platinum enrollments.
Another form of discrimination
But health insurance companies are sneaky and have devised all sorts of way to detour and discriminate against potential members. We recently found out that Blue Shield of California won’t allow individuals within six months of turning 65 to enroll online directly with Blue Shield. They are making those folks either fill out a paper application or go through Covered California to get health insurance for part of 2016.
Will commissions drop to $0?
As I have been documenting over the last several months, commissions paid to agents to help individuals and families enroll in health insurance has been steadily eroding. If you can’t get your health insurance agent to call you back, perhaps you’ve enrolled in a health plan that doesn’t support agents with a decent commission structure. The result of declining commissions will be met with a mirrored decline in customer service from the agent community.
Covered California endorses UnitedHealthcare
Covered California issued the following endorsement of UHC on December 10th in a communication to the agents.
UnitedHealthcare’s Solid Commitment to Covered California
Covered California’s qualified health plan, UnitedHealthcare has recently been in the news, and we want to reassure our Certified Insurance Agents that they remain committed to Covered California and to agents. California’s Individual Market is organized differently than other state exchanges and the federal health exchange which has allowed California to have a favorable risk pool of members. We believe UnitedHealthcare has priced appropriately for the costs they are projecting for 2016 in California and that they will likely have a different experience here than indicated in other states.
UnitedHealthcare has reassured the California Individual Marketplace that they are committed to enrolling and providing high-quality coverage for consumers in 2016 and agent commissions in California have not changed. For more information visit www.uhone.com/broker.
If Covered California’s definition of a solid commitment is ripping commissions away from agents, then Covered California has some misguided principals as an organization. Right below the butt kissing statement about UHC, Covered California sought to ease agent tensions by letting us know that Oscar hasn’t cut commissions.
Oscar Commissions Remain Unchanged
Oscar wants to reassure agents that commissions in California remain unchanged. For more information visit www.HiOscar.com/brokers.
So that lack of a commission cut is newsworthy? No one at Covered California cares about agent commissions. They all have nice salaries and benefits, just like those who work for the health plans. Agents to Covered California are a necessary evil in the short run. By endorsing UHC and remaining silent on the overall erosion of agent commissions, Covered California is helping the insurance companies slowly phase out agents altogether for individual and family plans. Thanks for stabbing us in the back Covered California after we delivered 40% of your enrollment to you over the last several years.
United Healthcare clarification December 10th
You may have received a recent announcement from UnitedHealthcare Individual notifying you of commission schedule changes. This is a follow up to confirm that commissions have not changed for UnitedHealthcare Individual health plans submitted through Covered California. Commission schedules can be accessed on E-Store under the Licensing and Commissions tab.
Again we see a pattern of discrimination, possibly orchestrated by Covered California. There is now less incentive to sell UHC off-exchange in 2016 because there will be no commissions paid. But if you take a client through the maze of Covered California, for which UHC must pay Covered California $13.95 per person per month, then the agent can get a commission. Not all agents want to work with Covered California and not all consumers want to use Covered California.
UHC avoids AB-1163 agent notification law
In 2015 Governor Brown signed AB-1163 in to law which requires health insurance companies to give 45 days notice to agent when they make material changes to the agent agreement.
Section 1399.3 is added to the Health and Safety Code, to read:
(a) A material change made by a health care service plan, as defined in subdivision (f) of Section 1345, to the terms and conditions of a contract between the health care service plan and a solicitor shall not become effective until the health care service plan has delivered to the solicitor, at least 45 days prior to the effective date of the change, written or electronic notice indicating the change or changes to the contract. For purposes of this section, a “material change” is a change made to a provision of the contract affecting any of the following:(1) Commissions, bonuses, and incentives paid to the solicitor.
UnitedHealthcare’s communication with agents
December 4, 2015
Although UnitedHealthcare’s individual On-Exchange plans remain available in all 34 states marketed for 2016, it has been determined we need to further adjust commissions paid on these products.
Effective January 1, 2016, no commissions will be paid for any new UnitedHealthcare Individual On-Exchange (and Off-Exchange mirror plans*) enrollments received on or after this date, in most states. Please see state exceptions below.** The new commission schedules will be available on our Broker Portal on January 1, 2016.
Please keep in mind:
•These changes do not affect UnitedHealthcare Medicare agreements or any other lines of UnitedHealthcare business. Only On-Exchange (and Off-Exchange mirror plans) individual health is affected.
•UnitedHealthcare will continue to pay according to the commission schedule in effect at the time a plan was sold for all new 2016 On-Exchange plans (and Off-Exchange mirror plans) received December 31, 2015 and prior.
•This change does not affect 2015 renewal commission rates which are unchanged from the 2015 schedules.
•These changes do not affect our members, their networks, plan benefits or the servicing of their plans.
As insurance companies across the nation make adjustments in response to the evolving Marketplace, it is our sincere hope that you will continue to remain active in the health insurance market. Your knowledge and professional services are valued by consumers and carriers alike.
Thank you for your business and also your patience as we implement these changes.
*Mirror plans are those plans that are identical to On-Exchange Plans (same license, benefits, etc.) and are required to be offered Off Exchange.
**On-Exchange Individual health plan enrollments through UnitedHealthcare Benefits Plan of California, and UnitedHealthcare of New York, Inc. have no commission changes. Health Plan of Nevada, Inc. will move to no commission’s payable for Exchange business starting with business received on February 1, 2016 and after.