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Federal Register / Vol. 86, No. 177 / Thursday, September 16, 2021 / Proposed Rules
3 The requirements in 148.410 that pertain to the disclosure and reporting of agent and broker compensation apply to health insurance issuers of individual health insurance coverage or short-term, limited-duration insurance, as defined in 144.103 of this subchapter.
b Applicability date. Except as provided in 148.124 certificate of creditable coverage, 148.170
standards relating to benefits for mothers and newborns, 148.180
prohibition of health discrimination based on genetic information, and 148.410 reporting and disclosure of agent and broker compensation, the requirements of this part apply to health insurance coverage offered, sold, issued, renewed, in effect, or operated in the individual market after June 30, 1997.
Notwithstanding the previous sentence, the definition of short-term, limitedduration insurance in 144.103 of this subchapter is applicable October 2, 2018.
12. Add subpart F to read as follows:
Subpart FRequirements Related to Reporting and Disclosure 148.410 Reporting and disclosure of agent and broker compensation for individual health insurance coverage or short-term, limited-duration insurance.

a In general. A health insurance issuer offering individual health insurance coverage or short-term, limited-duration insurance must make disclosures to individuals, as described in paragraph c of this section, and provide reports to the Secretary, as described in paragraph d of this section, regarding direct and indirect compensation provided by the issuer to an agent or broker associated with enrolling individuals in such coverage.
b Definitions. The following definitions apply to this section:
1 Agent or broker has the meaning given in 155.20 of this subchapter.
2 Commission schedule means an itemized list or table that provides the commission levels that are paid by an issuer for the sale, placement, or renewal of individual health insurance coverage or short-term, limited-duration insurance.
3 Direct compensation means monetary amounts, including sales and base commissions, paid by an issuer that are attributable directly to the policy, certificate, or contract of insurance and that are paid to an agent or broker for the sale, placement, or renewal of individual health insurance coverage or short-term, limited-duration insurance.
4 Indirect compensation means payments by an issuer attributable
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indirectly to a policy, certificate, or contract of insurance to agents, brokers, and other persons for items other than sales and base commissions for example, service fees, consulting fees, finders fees, profitability and persistency bonuses, awards, prizes, volume-based incentives, and nonmonetary forms of compensation.
5 Policyholder means the individual who purchases individual health insurance coverage or short-term, limited-duration insurance and who is responsible for the payment of premiums.
c Disclosure requirements1
General requirements. An issuer described in paragraph a of this section must disclose to a potential or existing policyholder the amount of direct and indirect compensation provided to an agent or broker associated with enrolling the policyholder in individual health insurance coverage or short-term, limited-duration insurance.
2 Disclosures related to initial enrollments in a plan. An issuer must disclose to all potential or new policyholders the amount of direct and indirect compensation, including the commission schedule applicable to the potential or current plan selection by all potential or new policyholders and an explanation of qualifying thresholds for the payment of indirect compensation to an agent or broker or, if an issuer does not use commission schedules, the information described in paragraph c5 of this section. Such disclosure must be made i Prior to when a potential policyholder finalizes their plan selection; and ii On any documentation confirming the initial enrollment, including enrollment documentation required by applicable State or Federal law or an initial enrollment package.
3 Disclosures related to renewals of enrollment in a plan. For renewals of enrollment in a plan, an issuer must disclose to a policyholder the amount of direct and indirect compensation, including, but not limited to, the commission schedule applicable to a plan renewal and an explanation of qualifying thresholds for the payment of indirect compensation to an agent or broker or, if an issuer does not use commission schedules, the information described in paragraph c5 of this section. Such disclosure must accompany the plan renewal notice required in 147.106f of this subchapter or 148.122i, if applicable.
4 Default disclosure. In the absence of any documentation required by State law or the requirement for a notice of
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renewal of coverage, issuers must disclose the amount of direct and indirect compensation, including information typically itemized on a commission schedule used to determine agent or broker compensation as well as an explanation of qualifying thresholds for the payment of indirect compensation to an agent or broker, with the invoice for the first premium payment for the initial coverage term and for each renewal period.
5 Compensation information. At a minimum, commission schedules or other documents that detail the applicable commission levels used to satisfy the requirements of this section must clearly specify commissions paid by the issuer to an agent or broker for the applicable plans for which the agent or broker has an appointment with the issuer, and distinguish between commission payments associated with new enrollments and such payments for renewed enrollments if the issuer differentiates compensation for those two types of enrollments. At a minimum, compensation information must also explain the qualifying thresholds for the payment of indirect compensation, such as bonuses, to an agent or broker. If an issuer of individual health insurance coverage or short-term, limited-duration insurance also offers direct or indirect compensation that is not captured by the commission schedule, the issuer must supplement the disclosure of the information on the commission schedule with additional documentation disclosing such other compensation.
d Reporting requirements1 In general. An issuer described in paragraph a of this section must report to the Secretary, in a form and manner prescribed by the Secretary, any direct and indirect compensation provided to an agent or broker associated with enrolling individuals in individual health insurance coverage and shortterm, limited-duration insurance sold by the issuer.
2 Payments to intermediaries.
Reporting must 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 made through one or more intermediary organizations, for example, general line agencies or marketing organizations.
3 Reporting period. The issuer must report, annually, on direct and indirect compensation paid to agents and brokers for individual health insurance coverage and short-term, limited-

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