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Can Health Insurance Agents Charge Fees?

by John Hansen

At the California Association of Health Underwriters (CAHU) Capitol Summit 2016, speakers considered the issue of whether or not health insurance agents can charge fees. President Michael Lujan argued, “There may be legal remedies to charge feels while we wait for commissions to come back to normal.”

Can agents charge fees to make up for falling commissions?

In the face of dropping commissions since the implementation of the Affordable Care Act (ACA), California health insurance agents have considered charging fees to their clients. However, there is question as to whether or not this is legal.

At the CAHU Capitol Summit, Don Cooper, health insurance agent and President of Triflex corporation, Jon Tomashoff, Senior Staff Counsel at the California Department of Insurance, and Stephen L. Young, lawyer and Senior Vice President and General Counsel for Independent Insurance Agents and Brokers of California, spoke to this issue.

Many health insurance agents in the room were in awe of the quiet presence of Jon Tomashoff, who authored or co-wrote much of the insurance code for California. Steve Young held up the large book of insurance code, gestured to Tomashoff and said, “He wrote the book.”

Cooper Addresses Health Insurance Agent Commissions and the Moral Imperative of Selling Health Care Products

Don Cooper began the panel discussion by talking about the history of health insurance agent commissions. He shared how commissions have been strong in California until now. He also shared a scenario where he set up various health care products for a law firm and charged a $15,000 fee.

Cooper argued that it is a moral imperative to sell health care products. People don’t want to think about getting sick or dying, so agents have to get them to think about it. He argued that it is critical that health insurance agents offer their clients not only health insurance, but also disability coverage.

Young and Tomashoff Seriously Question the Charging of Agent Fees

Steve Young and Jon Tomashoff, the legal guys, were much less optimistic about the possibility of an insurance agent charging fees in California for health care enrollments. They argued that an agent could only charge fees when operating as a broker and/or when offering many other services besides the placement of health care. The health insurance agents in the room left feeling very wary about the possibility of charging fees.