NU Online News Service, Nov. 30, 4:01 p.m. EST

WASHINGTON–Trade groups representing agents who sell health insurance are seeking congressional support for legislation that will exempt agent commissions from the medical loss ratio formula recently approved by the Department of Health and Human Services.

They are seeking sponsors for the legislation, especially in the House, according to several officials familiar with the agents' strategy.

They believe the new Republican majority in the House will support them, and note that seven Democrats on the key Senate Finance Committee are vulnerable because they are all facing re-election in 2012, according to the sources.

These sources also say that the legislation is unlikely to be introduced until next year.

At the same time, the National Association of Insurance Commissioners (NAIC) has formed a task force to advocate for the exemption of agents from the MLR.

According to a statement from the NAIC, the task force will be headed by Florida Insurance Commissioner Kevin McCarty and will hold its first meeting in early December.

The task force will report to the NAIC Executive Committee.

NAIC's plans to create such a task force were outlined during the plenary session at the group's October meeting, where the NAIC approved an MLR formula.

The document was effectively rubber-stamped by the Obama administration in the MLR regulation promulgated by the Department of Health and Human Services Nov. 22.

The formula provided a transition period for agents.

Both the NAIC and HHS said that they believed they lacked authority under the health care reform law to exempt agent commissions from the MLR.

But in its final regulation, HHS asked for comment on what else it could do to ensure agents remain part of the health care service team.

Under legislation drafted by a loose coalition of insurance agent trade groups, agent commissions would receive the same exempt status in the MLR ratio as federal, state and local taxes will receive under the existing regulation.

According to industry sources, the legislation was drafted by officials at the National Association of Health Underwriters. Other members of the coalition are the Independent Insurance Agents and Brokers of America, the National Association of Insurance and Financial Advisors, and the Council of Insurance Agents and Brokers.

Under the MLR, insurance companies must limit administrative costs to 15 percent of large group plan premiums and 20 percent of small group and individual plan premiums. They must fill out a form in 2012 outlining whether they complied with the MLR, and rebate premiums to consumers if administrative costs run higher.

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Agent Groups Develop MLR Legislation To Introduce In Next Congress

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