Throughout the rollout of the Affordable Care Act, insurance sales professionals have been particularly curious about the new health insurance “exchanges.” Beginning this week, millions of consumers will utilize these marketplaces in order to compare their coverage options and purchase their own insurance. But where does this leave agents and brokers? Can they continue to be a source of counsel and expertise for their health insurance customers? What do new terms like “navigator” and “exchange” really mean?
Those questions, as well as others that are especially relevant to insurance licensees, will be addressed here. More general information about the exchanges can be found elsewhere on this blog.
What’s an exchange?
A health insurance exchange is a government-overseen marketplace in which individuals and small businesses can shop for health insurance coverage. Individuals and small businesses who shop in an exchange will be able to closely compare their insurance options, determine their eligibility for new federal tax credits and apply for a health plan of their choice. Although several insurance companies will be offering plans for sale on the exchanges, all plans must meet certain federal and/or state standards.
Even though consumers will still be allowed to purchase insurance outside of an exchange, there are several important reasons why consumers might shop in one. Most importantly, individuals and small businesses must purchase their insurance through an exchange if they wish to receive tax credits and government subsidies that are available under the Affordable Care Act.
What’s the difference between an exchange, a marketplace and a SHOP?
In news items or discussions about the new health care law, you may have heard people use terms like “health insurance exchange” and “health insurance marketplace.” These terms mean the same thing. Although the law itself uses the term “exchange,” the general consensus is that the term “marketplace” is easier for consumers to understand.
You might also read or hear about SHOP, which stands for “Small Business Health Options Program.” A SHOP is a health insurance exchange in which small businesses can purchase group coverage. Most states will have at least two exchanges: one exchange for small businesses (a SHOP) and one exchange for individuals.
How do health insurance producers (agents and brokers) fit into the exchanges?
Health insurance producers are a valuable component to the new health insurance exchanges. Agents and brokers can be compensated for helping individuals and small businesses choose and enroll in a plan from an exchange. In fact, insurance companies can’t have separate compensation methods for producers who sell plans in the exchange and producers who sell other health plans.
Do health insurance producers need to complete additional training in order to help consumers in the exchange?
Training requirements depend on whether the exchange is for individuals or small businesses. Before helping Illinois consumers in an exchange for individuals, licensed health insurance producers must complete an online training program through the Center for Medicare and Medicaid Services. Producers must score at least 70 percent on a final exam and must supply a certificate of completion to each health insurer that they work with.
This training is not required for producers who will only be working in a SHOP exchange, but it is highly recommended. Regardless of the kind of exchange, producers must complete a registration process and sign certain documents.
For more on the training and the role of producers, contact the Illinois Department of Insurance or click here. Note that requirements for producers may differ from state to state.
I keep hearing about so-called “navigators.” Are they insurance producers?
Navigators are specially trained entities and staff who help facilitate enrollment in the exchange’s health plans and provide information about the Affordable Care Act. From the government’s perspective, the hope is that navigators will cater to communities that might be underserved by producers. For example, navigators might be stationed in low-income community centers where visitors are likely to be eligible for a newly expanded version of Medicaid.
Although it is technically possible for a licensed insurance producer to be a navigator, this overlap is unlikely to occur at the same time in the same transaction. Unlike a producer, a navigator in Illinois can’t make recommendations and can’t be compensated, directly or indirectly, by insurance companies. In general, navigators are compensated through federal and state grants. Also, training requirements for navigators are different from the training requirements for producers. Specifics may differ from state to state.
Although Illinois has passed a law that puts certain restrictions on navigators, additional rules are still being finalized by the Department of Insurance. For more about navigators in Illinois, click here.
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