NAIFA President: Elmination of commission payments in health insurance market ‘unfair’

Dear NAIFA member,

NAIFA strongly opposes recent decisions to reduce or eliminate commission payments to advisors on health insurance policies sold in the individual market. Decisions to cease commission payments on individual market policies sold after a certain date are ostensibly made to manage the costs of administering some health plans. These decisions are ill-advised, short-sighted and unfair.

Ultimately, the elimination of commissions will cause great harm to consumers, as it will adversely impact consumer access to professionally licensed and trained financial advisors at a crucial time when selecting and purchasing health insurance coverage is more complex than ever. Consumers will be left without the assistance of an experienced, licensed, trusted, and knowledgeable advisor to help them through the process of selecting and purchasing the right health insurance plan.

Eliminating commissions ignores the absolutely critical role of the advisor. Advisors help consumers navigate the complicated health insurance requirements under federal and state laws. Advisors also assist consumers in explaining the benefits of available health plans, evaluating and enrolling in health plans, and filing claims. Moreover, advisors provide personalized advice to their clients throughout the life of their policies.

It is critical that advisors be fairly compensated for their work when they help clients enroll in health insurance coverage to protect their families. The commission earned compensates advisors for the sale of a vital product and for providing valuable services to their clients. If advisors are not compensated for their services, many will not be able to provide these valuable functions to best serve their clients’ needs. Worse, without being compensated, some advisors may simply be forced to forgo selling health policies in the individual market, possibly leaving consumers without any guidance from a licensed advisor.

Advisors cannot be expected to provide services free of charge. It is imperative that commission levels are maintained for the benefit of both consumers and advisors and harmful decisions to reduce or eliminate commissions must be reversed.

Jules O. Gaudreau, Jr., ChFC, CIC