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Big "I" Sends HHS Comment Letter on Medical Loss Ratio (MLR) Rule

Association disappointed that agent compensation is included in formula.

WASHINGTON, D.C., Jan. 6, 2011 — The Independent Insurance Agents & Brokers of America (IIABA or the Big “I”) today sent formal comments to the U.S. Department of Health and Human Services (HHS) regarding their recently issued final interim rule on Medical Loss Ratio (MLR) requirements under the Patient Protection and Affordable Care Act (PPACA). In their comments, the Big “I” strongly urged HHS to amend the final interim rule to exclude agent commissions from the MLR formula altogether.
Effective Jan. 1, 2011, the new health care reform law requires health plans to issue rebates to consumers when their ‘non-claims costs’ – such as executive salaries, advertising and administrative costs – exceed 15% of premium revenue in the large group market or 20% in the small group and individual markets. If the thresholds are breached, rebates must be sent to consumers beginning in 2012.

“Throughout the process of the creation of the MLR regulation, we urged HHS to exclude agent commissions because these commissions are passed 100% to third parties by insurers and therefore should not be included in the formula,” says Robert Rusbuldt, Big “I” president & CEO. “Unfortunately, HHS’s interim final rule included commissions as ‘non-claims cost.’”

In the comment letter, the Big “I” explained that agent commissions are pass-through fees and should not be considered insurance company premiums at all. The Big “I” also questioned the process by which these regulations were drafted, and specifically the role played by HHS during the National Association of Insurance Commissioners (NAIC) development of the MLR regulation recommendations.

To read the complete letter, click HERE.

Founded in 1896, the Big “I” is the nation’s oldest and largest national association of independent insurance agents and brokers, representing a network of more than 300,000 agents, brokers and their employees nationally. Its members are businesses that offer customers a choice of policies from a variety of insurance companies. Independent agents and brokers offer all lines of insurance—property, casualty, life, health, employee benefit plans and retirement products. Web address:


​127 South Peyton Street
Alexandria VA 22314
​phone: 800.221.7917
fax: 703.683.7556

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