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NAIC postpones decision on medical loss ratio exemption
By Insure.com staff

A National Association of Insurance Commissioners (NAIC) committee postponed a decision to support legislation that would exclude health insurance sales commissions from the medical loss ratio (MLR) provision of the health care reform law.

Under the Patient Protection and Affordable Care Act (PPACA), insurance companies must spend at least 85 percent of large group premiums, and 80 percent of individual and small group premiums, on medical care or quality improvements rather than on administrative costs.

Currently, the MLR includes health insurance sales commissions. Agent and broker compensation has been significantly cut in order to meet these new regulations, according to the Independent Insurance Agent & Brokers of America. Agents and brokers want the NAIC to endorse the Access to Professional Insurance Advisors Act, which would exempt policy sales commissions from MLR calculations.

However, Sen. John D. Rockefeller IV (D-W.V.) and others oppose changes to MLR formulas. In a letter to the NAIC, Sen. Rockefeller said he "cannot support a proposal that would allow agents, brokers and health insurance companies to retain (an) estimated $1 billion in benefits that Americans" would otherwise receive in health insurance plan benefits.

In postponing their decision, the NAIC said more information was needed before a decision to endorse the Access to Professional Insurance Advisors Act could be made. The Professional Health Insurance Advisors Task Force, which will lead NAIC's decision, is expected to take the matter up in late April.

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