In traditional health insurance plans the insurance carrier or managing agent authorizes and makes payments to brokers like Evergreen Health Partners in arrears. This means that after health plan premiums are paid the broker or producer gets usually between 2-5% of the premium paid, according to compensation agreements and as a matter of standard operating procedure. This is common practice for group insurance plans with greater than 50 employees. Small group insurance plans pay out a flat commission on a per contract basis because of the new limits placed on insurers through ACA relative to achieving the 80% claim rule mentioned above.
Broker compensation does not directly affect our clients’ premiums. With the changes already enacted by ACA, insurers have increasingly driven down the commissions they pay out, especially on groups of less than 50 employees.
Some brokers anticipate negotiating direct compensation with employers of all sizes to provide consulting like services in a complicated world expected after ACA is fully in effect by the end of 2014.