Proposed Annual Ongoing Costs Regarding Disclosure of Agent and Broker Compensation to Enrollees Prior to Enrollment

DRAFT
O MB control number 0938-NEW
Expiration date : XX/XXXX

Appendix 1 - Agent and Broker Disclosure and Reporting Requirements
Data Elements
Title I (No Surprises Act) and Title II (Transparency) of Division BB of the Consolidated
Appropriations Act, 2021 (Pub. L. 116-260) (CAA), establish new protections for consumers
related to surprise billing and transparency in health care. The Department of Health and Human
Services (HHS), in coordination with the Department of Labor (DOL) and the Department of the
Treasury (Treasury) (collectively, the Departments), and to a lesser degree the Department of
Transportation and other federal components, is responsible for implementation and, along with
state regulatory entities, enforcement of these new requirements. This information collection
concerns the collection of data related agent or broker compensation associated with enrolling
individuals in individual health insurance and reporting that information to HHS.
The CAA amended Title XXVII of the Public Health Service Act (PHS Act) (42 U.S.C. 300gg41 et seq.) to add section 2746 to require issuers offering individual health insurance coverage or
short-term limited duration insurance (STLDI) coverage to make disclosures regarding direct or
indirect compensation provided by the issuer to an agent or broker to prospective enrollees and
report annually such compensation to the Secretary of Health and Human Services (HHS). The
proposed rule, entitled “Reporting Requirements Regarding Air Ambulance Services; Agent and
Broker Disclosure Requirements; Provider Enforcement” (henceforth the proposed rule”
includes requirements for health insurance issuers offering individual health insurance coverage
or short-term, limited-duration insurance to make disclosures to policyholders and submit reports
to HHS regarding direct and indirect compensation provided by the issuer to an agent or broker
associated with enrolling individuals in such coverage.
These disclosures are to inform policyholders, participants, beneficiaries, or enrollees of any
direct or indirect compensation being paid to an agent or broker associated with the policyholder,
participant, beneficiary, or enrollee enrolling in individual health coverage or STLDI coverage.
Providing this information to the potential consumer would properly notify the consumer so they
may be able to make more informed decisions regarding their health coverage. Consumers
interested in knowing to what degree an agent or broker would receive a commission for selling
them a health insurance plan may use this information to determine if they believe an agent or
broker may have a conflict of interest and is seeking to steer the consumer toward a plan in order
to obtain greater commissions rather than towards plans that adequately meet their needs.
Disclosing this information may provide consumers more clarity into the potential motivations or
incentives of the agent or broker and allow them to determine if they want to enroll in, or renew,
a particular health insurance plan.
All issuers covered by this section are required to report annually to the Secretary of HHS any
direct or indirect compensation provided to an agent or broker associated with enrolling
individuals in individual health insurance coverage or STLDI coverage. Analyses of this
information would assist HHS in monitoring and enforcing compliance with the disclosure
requirements and ensuring that consumer disclosures accurately and adequately reflect direct or
1

DRAFT

indirect compensation payment practices. HHS may also use the information to report, in a deidentified manner consistent with federal privacy laws, the distribution of compensation
throughout the individual health insurance and STLDI markets.
Table 1, below, identifies data elements that issuers of individual health insurance coverage or
short-term, limited-duration insurance (STLDI) must include in their disclosures to prospective
policyholders prior to plan selection and on documentation confirming enrollment. Table 2
identifies data elements that issuers of individual health insurance coverage or STLDI must
include in their annual reporting to HHS.
Table 1: Agent and Broker Disclosure Requirements
RESPONSIBLE
PARTY
Issuer

DATA ELEMENT
Direct Compensation

Issuer

Indirect Compensation

Issuer

Default Disclosure

Issuer

New Enrollments vs.
Renewed Enrollments

DESCRIPTION
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.
Payments by an issuer attributable 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 non-monetary
forms of compensation).
In the absence of any documentation
required by State law or the requirement for
a notice of 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.
Commission schedules or other documents
must distinguish between commission
payments associated with new enrollments

2

DRAFT

RESPONSIBLE
PARTY

DATA ELEMENT

DESCRIPTION
and such payments for renewed enrollments
if the issuer differentiates for those two types
of enrollments.

Table 2: Agent and Broker Reporting Requirements
RESPONSIBLE
PARTY
Issuer

Issuer

DATA ELEMENT
Payor Federal Tax ID
Number (FTIN)

A unique nine-digit number assigned by the
Internal Revenue Service to business entities
operating in the United States for the
purposes of identification.
Recipient Identifier Type
NPN – A unique identifier assigned through
(“NPN” for writing agents or the National Association of Insurance
“FTIN” for payments made Commissioner’s licensing application
process.
to intermediaries)

Issuer

Recipient Identifier Value

Issuer

The date on which the
payment was made to the
payment recipient
Direct Compensation,
expressed as a dollar amount
(the commission)

Issuer

Issuer

Issuer

DESCRIPTION

FTIN – See above definition
The actual compensation number
The date on which the payment was made to
the payment recipient

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.
Indirect Compensation,
Payments by an issuer attributable indirectly
expressed as a dollar amount, to a policy, certificate, or contract of
if any
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 non-monetary
forms of compensation).
The basis for indirect
A text field allowing entry of what the
compensation
grounds for the indirect compensation were
(bonus, incentive, etc)
3

DRAFT

RESPONSIBLE
PARTY
Issuer

DATA ELEMENT
Other information specified
by the Secretary

DESCRIPTION
Reserved for making additions to future
reporting elements, including distinguishing
between individual health insurance
coverage and short-term, limited-duration
insurance, listing the appointment
arrangement duration, and providing the
number of plans the agent sold.

Paperwork Reduction Act Statement
According to the Paperwork Reduction Act of 1995, no persons are required to respond to a
collection of information unless it displays a valid Office of Management and Budget
(OMB) control number. The Departments are seeking OMB approval for the model as part
of the approval for a new OMB control number 0938-NEW. The time required to complete
this information collection is estimated to average of one hour and fifteen minutes hours per
respondent and per month, including the time to review instructions, search existing data
resources, gather the data needed, and complete and review the information collection. If
you have comments concerning the accuracy of the time estimate(s) or suggestions for
improving this form, please write to: CMS, 7500 Security Boulevard, Attn: PRA Reports
Clearance Officer, Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.

4