FAQs on Agent and Broker Compensation for Special Enrollment Periods

The Centers for Medicare & Medicaid Services (CMS) posted Frequently Asked Questions (FAQs) regarding compensation paid by issuers to agents and brokers who assist consumers with enrollment during a Special Enrollment Period (SEP) or during Open Enrollment Periods (OEPs). It has been made a priority by the Biden-Harris Administration to provide those who are uninsured and underinsured with quality, affordable health care coverage and recognizes that agents and brokers play a vital role in helping consumers enroll in coverage that best fits their needs and budget.

CMS has become aware that some issuers in the individual market, who commonly use agents and brokers as part of their marketing and sales distribution channels, have reduced or eliminated commissions and other forms of compensation to agents and brokers for enrollments during an SEP. Today’s FAQs provide guidance that paying differential compensation to agents and brokers for coverage in the same benefit year based on whether the enrollment is completed during an SEP or during the OEP is prohibited under federal law. These practices violate the guaranteed availability protections afforded to these individuals under the Affordable Care Act.

The Centers for Medicare & Medicaid Services (CMS) has become aware that some health insurance issuers offering individual market health insurance coverage, including issuers of qualified health plans offered through the Marketplaces, have reduced or eliminated commissions and other forms of compensation for agents and brokers who assist consumers with enrollments in individual market coverage during a special enrollment period (SEP). 

Is it permissible for an issuer to differentially compensate agents or brokers who assist consumers with enrollments in individual market coverage in the same benefit year based on whether the enrollment is completed during an SEP or during the applicable benefit year’s Open Enrollment period (OEP)? 

No. Arrangements that pay reduced or no commissions and other forms of compensation to agents and brokers who assist consumers with enrollment in individual market coverage during an SEP and pay higher amounts for OEP enrollments for the same benefit year violate the guaranteed availability provisions of the Affordable Care Act. Issuers’ normal conduits for receiving applications and offering coverage must also be open to individual market consumers for OEP and SEP enrollments, as applicable. An arrangement that reduces or eliminates the commission or other compensation an agent or broker receives for SEP enrollments compared to the commission or other compensation received for OEP enrollments in the same benefit year discourages agents and brokers from marketing to and enrolling individuals eligible for an SEP. These practices therefore violate the guaranteed issue protections afforded to these individuals under the statute. Exceptions may be made for cases in which state regulators make specific recommendations for issuers to address solvency concerns or financial capacity limitations.

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