October 14, 2013

Brokers simplify, confuse health exchange shopping

An industry group warns of bogus websites and unsolicited calls by people claiming they need personal information to help customers enroll in insurance.

By Emery P. Dalesio
The Associated Press

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The Associated Press Insurance broker Jeff Lindstrom, right, meets with Brandi and Darren Litchfield to discuss health insurance plan options, at their home in the Seattle suburb of Bothell, Wash. Darren works for a startup company that doesn’t yet offer an employee insurance plan, so they invited Lindstrom to outline the options of different healthcare plans that he offers as a broker.

The top online search result using the terms “texas health insurance exchange online” is for Texas Health Insurance Exchange, which sells unsubsidized insurance policies. The broker who owns the website is Scott Thiltgen, a state-licensed insurance agent in Cedar Park, Texas. He said he’s also marketing on his Facebook page, Texas Health Insurance Marketplace.

Thiltgen said he’s not out to confuse consumers.

“It’s basically there to have someone they can talk to that knows about the exchange,” he said.

He said he’s earned the federal certification needed to sell subsidized policies on exchanges, and plans to start once the federal marketplace sorts out its glitches.

“Right now I’ve got a list of people that are ready to sign up for subsidized exchange plans, but can’t,” Thiltgen said.

While regulators have warned consumers, they don’t have any reports of people being cheated. The National Association of Insurance Commissioners and state agencies in Pennsylvania, Virginia and North Carolina report no complaints since the marketplaces launched on Oct. 1.

Those with industry experience warn whenever there’s money and confusion, consumers should be alert. Fraudsters saw opportunities when Medicaid Part D prescription drug insurance plans hit the market a decade ago, said Waltman, of the agents and brokers trade association.

“I think that we have to be concerned that this has happened a variety of times in the past,” Waltman said.

The first line of defense is checking whether a broker or agent is licensed by the state insurance department where they operate. Usually that can be done online.

The federal Centers for Medicare & Medicaid Services doesn’t have a similar option to check whether an agent has completed training necessary to work for consumers on a federally run exchange. The federal agency recommends consumers ask agents to provide a copy of the certificate showing they’ve completed training.

Some states that operate their own exchanges plan to identify marketplace-certified brokers, but that has not yet happened in all states, leaving a temporary gap for consumers. More than 2,600 state-licensed brokers cleared to work on New York’s exchange were expected to be listed on its website soon, the state’s health department said.

Still, spreading the word that subsidized health insurance is available and explaining how consumers should buy it leaves a legitimate role for brokers, Waltman said. Brokers earn commissions paid by insurance companies and not consumers.

Some brokers are under pressure to add customers because the commissions they earn on each policy are shrinking as the law rolls out.

Boise, Idaho, insurance agent Tom Shores estimates he’ll need to pick up 3,000 new customers to offset commissions cut to about $9 per policy each month. Shores estimates a quarter of his brokerage’s 4,000 existing health insurance customers also might learn they’re eligible for Medicaid, the government insurance for low-income people, once they enter their financial data into the exchange system.

“The only way we’re going to make money is to get more people,” Shores said late last month.

The two largest companies on South Carolina’s exchange are paying commissions of about $28 per policy per month for the first year, dropping to $14 a month after that, said John Adair, a broker in Greer, S.C.

“The law is complicated and making any sort of insurance purchase can be complicated – which plan to choose, deductibles, co-insurance, co-pays, network of providers,” said Adair, who built a website and licensed his business in states nationwide to capture new customers. “With what we’re seeing with the federal exchange, and some of the glitches, the agents themselves are very much in high demand.”

Emery Dalesio can be reached at http://twitter.com/emerydalesio

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