How Much Commission Does a Broker Earn for Enrolling Someone in Health Insurance under the Affordable Care Act (ACA)?

The commission a broker receives for enrolling someone in health insurance under the Affordable Care Act (ACA) can vary widely based on several factors, including the insurance company, the specific plan, and the broker's agreement with the insurer.

Commission Variability

Generally, commissions can range from 1 to 5 percent of the premium. However, for individual marketplace plans, brokers might receive a flat fee per enrollment, which can range from $50 to $200, depending on the state and the complexity of the plan. Additionally, some states have regulations that set limits on what brokers can earn in commission for ACA plans.

State Regulations and Flat Fees

It is crucial to note that many consumers do not pay a higher premium when using a broker; instead, the commission is typically paid by the insurance company. Some states have specific regulations or flat fees that brokers receive for each enrollment. For instance, in the Federal High Risk Pool in 2012 and 2013, brokers were supposed to receive $100 per person sign-up, but this payment didn't materialize, leading brokers to work for free.

Historical Issues and Consequences

Due to historical issues such as some insurers failing to pay commissions, enrollment rates were significantly impacted. In 2012 and 2013, the Federal High Risk Pool was supposed to provide $100 per person sign-up, but no payment was made, leaving brokers to help enrollees without compensation. As a result, brokers and agents stopped assisting people, leading to enrollment rates being just one-third of what was expected. The cost per patient escalated fourfold, and the program had to close early.

In Maryland, the largest insurer, CareFirst, only paid agents for one year of the four-year ACA enrollment period. This led to agents working for free, reducing their willingness to assist with enrollments. Similarly, in Georgia, new state laws have been enacted to address these issues, and the ACA enrollment system is facing internal challenges.

Agency and Broker Differences

Brokers typically earn a bit more commission than individual agents, which is around 15 percent, due to the additional services they render. However, the exact percentages can vary significantly depending on the state and the carrier involved.

Tips for Consumers

In most cases, using a broker does not increase the premium, as brokers are compensated by the insurance company. Consumers should find a good broker who understands their needs and can help them find the right plan. While the commission structure can impact a broker's incentive, it is important to remember that rates will remain the same whether or not a broker is involved.

Conclusively, while the commission system for brokers under the ACA can vary, consumers should prioritize finding a reputable broker who can offer guidance and support throughout the enrollment process. Always verify state-specific regulations and insurer policies for the most accurate and up-to-date information.