California health insurance agents are by far the most popular way for consumers to enroll in new Obamacare coverage.
But many of the agents are still waiting to be paid commissions by the state and insurance companies. In some cases the bills date back more than a year.
It’s not known how much money is owed statewide, but some agents are claiming they are due $20,000 and more.
If the delays continue, the state may see agents forgoing business on Covered California, the state insurance exchange, which could knock a hole in sign-up efforts.
“It’s very difficult for agents to continue to help consumers if they’re not going to get paid for the work that they’re doing,” said Patrick Burns, president of the California Association of Health Underwriters, an industry group that represents more than 2,000 health insurance agents.
“A number of our members have already said that they are going to not be selling individual plans next year during open enrollment,” Burns said.
Covered California officials say they are aware of the problem and are working to fix it.
“Covered California takes very seriously this delay in payments as well as assuring that the payments are accurate,” said spokesman James Scullary.
Agents signed up 43 percent of individuals and families in Covered California plans this year, compared to 30 percent who self-enrolled on the Covered California website. The remainder signed up with the help of Covered California Service Center representatives, Certified Enrollment Counselors and Certified Plan-Based Enrollers.
Agents also play a major role in enrolling small businesses into Covered California, and consumers into Medi-Cal, which provides coverage to low-income residents.
In each of these cases, they are paid a commission for their enrollments, either by Covered California or the health plans.
Commission amounts for individual and family plans vary, based on the insurer. But generally, an agent can expect to earn 1 percent to 4 percent of the first annual premium, and a smaller percentage on each annual renewal. For businesses with up to 50 full-time employees enrolling in the Small Business Health Options Program, or SHOP, agents can earn 6.5 percent of the first annual premium. For Medi-Cal enrollments, agents get a one-time $58 fee.
Unpaid commissions add up
Many of the unpaid commissions are from SHOP. Among those waiting for payment is Burns, who claims he is owed $20,000.
Kevin Knauss, an agent based in Granite Bay, is still owed about $1,000 for enrolling businesses in SHOP last year.
“I have not received a (SHOP) commission to date, “ Knauss said.
Covered California’s Scullary said the delay in SHOP commission payments is due to the process for reporting and validating the payments being “more manual” than expected. He said Covered California expects to distribute SHOP payments by the end of April.
“Once we bring our SHOP commission payments up to date, we anticipate that we will be making SHOP commission payments within 45 days after the policy goes into effect,” Scullary said.
For individual and family enrollments, agents receive commissions from insurance carriers.
Evette Tsang, a Sacramento-based agent, estimates that Kaiser Permanente owes her $10,000 in commissions.
“Kaiser told us when Covered California transferred the enrollment information, they just omitted the agents’ information,” Tsang said.
Burns says missing agent information has occurred across all insurance carriers partnered with Covered California.
Chris Stenrud of Kaiser Permanente agrees that technical problems are the main challenges to ensuring agents get paid.
“Kaiser Permanente, like all participating carriers in California, has been working hard to deal with the technical challenges posed by moving a massive number of individuals into health coverage for the first time,” Stenrud said.
Covered California, on the other hand, says that it has supplied all the necessary information to insurance companies.
Tsang and other agents say they are caught in the middle.
“It’s a breach of our contract,” Tsang said. “We’ve essentially been providing a free service since the beginning of open enrollment.”
Because eligibility for plans is based on income, an agent won’t know right away if an enrollee will end up in a Covered California plan or a Medi-Cal plan.
Payments are issued through Covered California on behalf of the Department of Health Care Services, which administers Medi-Cal. Agents are supposed to receive commission payments “approximately three months” after an enrollment, said Anthony Cava of the DHCS.
That hasn’t been the case for Robert Shade, an agent in Tustin, who says he is still owed $6,500 in Medi-Cal commissions dating back more than a year.
By the end of this month, Covered California will have made payments for a total of 170,974 applications, Cava said. That represents all applications submitted through December, he said.
A frustrated Shade says he doesn’t have the time to keep pursuing the issue.
“I am writing the lost income off as a loss,” Shade said.
Hellesen writes for the CHCF Center for Health Reporting, based at the University of Southern California’s Annenberg School for Communication and Journalism.