Kilpatrick

Carrier News

BCBS Small Group Broker Compensation Change in 2018

BCBS of TX revised broker compensation on small group business. For new business effective beginning 1/1/2018 and upon renewal on/after 1/1/2018, BCBS will reduce broker compensation on ACA-compliant small group policies from 4.5% to 4.25%. The change applies to ACA-compliant business. It does not apply to transitional policies, grandfathered policies, and Blue Balance Funded programs. Those will remain payable at 4.5%.

Impact

The change will not reduce actual average broker compensation. Over the last two years, BCBS premiums per employee per month (PEPM) have increased 9.6% annually on ACA-compliant business after benefit changes. BCBS is reducing the commission factor by 5.6%. The rate of premium inflation exceeds the reduction in commission factor.

BCBS last modified broker compensation in 2011. The table below summarizes relevant data from our book of business on a PEPM basis to put the change into perspective. The 2015-17 averages are limited to ACA-compliant business because non-compliant business is not affected by this change. The last row shows projected premium in 2018 using historical averages and the corresponding compensation at a 4.25% rate.

Avg Premium Comp % Avg Comp $
2011 $564.55 4.50% $25.40
2015 $686.82 4.50% $30.91
2016 $773.79 4.50% $34.82
2017 $818.07 4.50% $36.81
2018* $896.24 4.25% $38.09

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