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Federal Register / Vol. 86, No. 177 / Thursday, September 16, 2021 / Proposed Rules finalizing plan selection. This amount of coordination seems unduly burdensome on consumers and would virtually eliminate parents ability to finalize a plan selection while their children are in school, as the children would generally be unable to be contacted by the agent or broker while attending classes. In addition, emails or phone calls from unknown individuals are often not answered or responded to promptly, if at all, meaning a policyholder would need to first contact the other plan enrollees, telling them to expect a call from the agent or broker, which adds another layer of coordination and complexity.
Additionally, children or developmentally challenged individuals may not be mentally capable of providing their consent or may not have an email address or phone number, meaning if they were not physically with the policyholder at the time directly prior to finalizing plan selection, contacting them would be impossible.
c. Reporting Requirements To implement the requirement at section 2746c of the PHS Act that health insurance issuers offering individual health insurance coverage or short-term, limited-duration insurance must annually report to HHS prior to the beginning of open enrollment any direct or indirect compensation provided to an agent or broker associated with enrolling individuals in such coverage, HHS proposes in new proposed 45 CFR 148.410d1 to require issuers to submit to HHS, in a form and manner prescribed by the Secretary, any direct and indirect compensation provided to agents and brokers associated with enrolling individuals in individual health insurance coverage and short-term, limited-duration insurance sold by the issuer. HHS intends to collect data similar to the data collected by DOL on compensation of insurance producers for group health plans subject to the Form 5500 reporting requirement.
DOL utilizes the Form 5500 series as part of its overall reporting and disclosure under ERISA. DOL collects information related to insurance on Form 5500 Schedule A, which includes the identifying information for the issuer and the agent or broker, and the amount of compensation paid to agents and brokers. Issuers would be expected to submit the reporting data to HHS
through an online system. HHS is proposing to require issuers provide, for each payment recipient and intermediary organization in a specific month of the reporting year, a single
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row of data in comma-separated values CSV format containing the following fields/columns: 1 Payor Federal Tax ID
Number FTIN; 2 Recipient Identifier Type NPN for writing agents or FTIN for payments made to intermediaries; 3 Recipient Identifier Value the actual number; 4 The date on which the payment was made to the payment recipient; 5 Direct Compensation, expressed as a dollar amount the commission; 6 Indirect Compensation, expressed as a dollar amount, if any if indirect compensation payment amount was made in that month, for example, a bonus was paid out; bonuses for annual performance are accounted for in December of the reporting year rather than disaggregated into 12 parts for each month; 7 the basis for indirect compensationa text field allowing entry of what the grounds for the indirect compensation were bonus, incentive, etc.; and 8 other information specified by the Secretary, which may include, for example, distinguishing between individual health insurance coverage and shortterm, limited-duration insurance, listing the appointment arrangement duration, and providing the number of plans the agent sold.
HHS proposes to add new proposed 45 CFR 148.410d2 to specify that the reporting by issuers would be required to reflect both compensation arrangements directly between the writing agent or broker and the issuer, and compensation arrangements from the issuer to the writing agent or broker involving one or more intermediary organizations in connection with the sale of individual health insurance coverage or short-term, limited-duration insurance. Examples of intermediary organizations that are often involved in the sale, placement, or renewal of individual health insurance coverage or short-term, limited-duration insurance include general line agencies and marketing organizations. This proposed approach would ensure that the information reported annually to HHS
reflects the full amount of compensation received by agents and brokers related to the sale, placement, or renewal of individual health insurance coverage and short-term, limited-duration insurance.
HHS proposes that the annual report submitted by issuers to HHS contain more detailed information than the disclosure to policyholders, including information related to intermediary organizations as well as actual compensation amounts rather than payment structures, because HHS
proposes for the report to be due after the end of the year for which
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compensation was paid and prior to the beginning of open enrollment for the following year. This timeline would enable the report to HHS to provide a more complete reflection of compensation actually provided throughout the previous calendar year than the disclosure to consumers, which must be provided prior to individuals finalizing their plan selections and at renewal. In addition, requiring issuers to provide information to policyholders on the compensation arrangements between insurance agents or brokers and intermediary organizations, like general agencies, would substantially increase the complexity of the disclosure materials without providing the same level of consumer benefit. Disclosure of direct and indirect compensation is intended to inform the consumer of considerations, other than the consumers best interests, that may impact the guidance and decisionmaking of the insurance agent or broker.
HHS is of the view that information about whether that compensation would first be paid to a general agency and the amount of compensation that agency would claim before disbursing to the agent would not have a similar impact on the consumers decision-making process. However, reporting of this additional information to HHS would assist HHS in monitoring and enforcing compliance with the disclosure requirements and ensuring that consumer disclosures accurately and adequately reflect direct or indirect compensation payment practices.
HHS proposes in new proposed 45
CFR 148.410d4 to require submission to HHS of the required reports on an annual basis by the last business day of July of the calendar year following the applicable reporting period. For example, reporting for calendar year 2022 would be due by July 31, 2023.
Under this proposed rule, for noncalendar year policies, which may exist in the short-term, limited-duration insurance market, issuers would be required to split the agent and broker compensation between the reports for two calendar years. For example, for a short-term, limited-duration policy in effect from December 1, 2022 to February 28, 2023, an issuer would be required to report the compensation paid on the policy for December 2022 in the report due by July 31, 2023 and the compensation paid on the policy for January and February 2023 in the report due July 31, 2024. HHS seeks comment on this proposal, and would provide additional guidance in the final rule on special cases, as may be necessary, including indirect compensation paid
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