How are agents and brokers compensated?

Agent / Broker Commission Information

  • 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.

  • This requires issuers of individual health insurance plans to disclose to prospective enrollees the compensation an agent or broker receives from the issuer.

  • Please note the monthly premium you pay for your plan remains the same whether you work with an agent or broker to enroll or not.  There is no additional premium or cost to the consumer by working with a broker or agent.

  • Keep in mind there are many advantages to working with an independent broker:

    • No cost professional advice and assistance all year.​

    • As an independent broker there is no obligation, favoritism or bias toward a particular insurance company

    • As your broker, enrollment assistance is only part of the job. During the year, you can contact your broker anytime for guidance, advice, questions or help with a problem.

  • Each insurance company has a different and unique compensation structure for agents and brokers.  Many variables include:

    • Compensation will vary in some or more of these ways:

      • Each company may pay differently

      • Different plans may pay different compensation.  In other words, an ACA plan from Company A may pay differently than Company B. Some may pay per member per month, some may pay per policy per month.  Some may pay during Open Enrollment but not during Special Enrollment.  Some may pay more in one state, and less in another.  Also, ACA plans may pay more or less than other types of plans such as ancillary supplemental plans, Medicare plans, small group business plans, etc. 

    • Compensation amounts may also vary depending on:

      • the date the plan was selected, is effectuated, and/or issued.

      • Some plans may even pay no compensation and services are simply offered as a courtesy.

      • Some plans may be less depending on the age of the applicant, or if the applicant was already with the company and is a renewal applicant.

    • Compensation amounts may also depend on many other factors including how many policies are issued per year per company, age of the client, duration of the policy, etc.

    • There are also other factors which may affect compensation including fees, charge-back provisions, bonuses, and reduced or no compensation due to early cancellations of policies.

  • Top line revenue versus Net actual pay:

    • Also, keep in mind that any compensation to the agent or broker is not equivalent to the amount of net income the agent or broker may actually receive as income.  A large amount of revenue received from agent or broker compensation might first be paid to the Managing General Agency, and then to the General Agency which may employ the individual agent or broker.

    • Once the agent or broker receives their portion of compensation, additional business expenses must also be considered including:

      • Licensing and Continuing Education Expenses

      • Agency and agent/broker general liability Insurance fees

      • Appointment fees & operating expenses

      • Marketing expenses

      • Business taxes and fees

      • Individual federal, state and local taxes

      • Business office rent and expenses and insurance

      • General expenses including communication, utilities, transportation, office supplies, etc.

  • If you would like more details on the compensation of specific policies you are shopping for or purchasing:

    • Specific compensation information is available upon request regarding any plan type as required under law.  Simply send an email to info@kladirect.com with details on what plan you would like compensation information.

      • Some plans may publish this information on their specific websites. However, keep in mind the amounts listed may not reflect the variables, both positive and negative, as listed on this page.

      • You may also ask your agent or broker for details at the time of your consideration and/or purchase of a policy, and if the plan you are shopping for is included in the law as one of the plans required to provide compensation information it will gladly be provided to you based on the information available at that time.

    • Please note compensation information can change at any time and is subject to many of the variables listed above and elsewhere and therefore will likely be a best estimate at the time.

  • Please note the monthly premium you pay for your plan remains the same whether you work with an agent or broker to enroll or not.  There is no additional premium or cost to the consumer by working with a broker or agent.