HHS’s final Medical Loss Ratio rule doesn’t include broker exemption

The Obama Administration released its final rule on calculating Medical Loss Ratio as part of the Affordable Care Act, and fees paid to brokers and agents won’t count as medical care (Source: “Final Medical Loss Ratio Rule Rebuffs Insurance Agents,” Kaiser Health News, Dec. 2, 2011).

Under the health reform law passed last year, insurers are required to spend at least 80 percent of their premium revenue on medical care, or issue rebates to consumers (the threshold is 85 percent for large groups). Agents and brokers had pushed administration officials to have their fees exempted from the calculation of administrative costs. They argue that without such a move, commissions will be cut and agents could lose their jobs, leaving consumers without as much access to brokers who help them choose coverage plans.

However, consumer advocates pushed to have the fees included as administrative costs, asserting that an exemption would make it easier for insurers to pay the required rebates to consumers.