Navigators & Agents and Brokers: How They Fit into the Health Insurance Exchange Formula

By Cynthia D. Shenker, Esq. and Sandy M. Smith, Esq. of Wilson Elser Moskowitz Edelman & Dicker LLP

The Affordable Care Act (ACA) requires Health Insurance Exchanges (Exchanges) to establish a Navigator Program. In general terms, Navigators are the “public face” of the Exchange – they are charged with educating the public concerning the existence of the Exchange and facilitating the selection of qualified health plans (QHPs). Entities that meet certain requirements are eligible to receive grants from the Exchange and to act as Navigators. Licensed agents and brokers can sell QHPs in the Exchange or can serve as Navigators.


Navigator Programs

The ACA and federal regulations outline the basic framework of the Navigator Program and have left to the Exchanges and/or the states the responsibility for working out the details. Specifically, this framework includes:

·       Grants to eligible Navigator entities

·       Duties of Navigators

·       Criteria to determine eligible Navigator entities

·       Licensing or certification imposed by the Exchange and/or the state

·       Prohibitions concerning conduct and conflicts of interest of Navigators.


Grants to Eligible Navigator Entities

Under the ACA, the Exchange may not use federal funds to award grants to eligible entities seeking to participate in the Navigator Program. Rather, the Exchange must use its operational funds derived from non-federal sources to subsidize the grants. Such operational funds may include “user fees,” i.e., fees paid by health insurance issuers to have their products included in the Exchange.


The Exchange must provide public notice of the standards to be met by Navigator candidates wishing to receive grants. These standards must address conflict of interest issues, the needs of certain populations of prospective purchasers, eligibility and enrollment procedures, the menu of QHP options, and privacy and security mandates.


Duties of Navigators

While an Exchange and/or the state may impose additional requirements, Navigators must at a minimum (1) maintain expertise in eligibility, enrollment and program specifications as well as conduct public education activities to raise awareness about the Exchange; (2) provide information (including the existence of other health programs) and services in a fair, accurate and impartial manner; (3) facilitate selection of a QHP; (4) provide referrals to the applicable agency relative to any grievance, complaint or question regarding health plans; and (5) provide information in a manner that is culturally and linguistically appropriate to the needs of the population being served by the Exchange. The preamble to the regulations clarifies that Navigators should make consumers aware of the tax implications of their decisions as well as assist with applications for premium tax credits and cost-sharing reductions.


Criteria to Determine Eligible Navigator Entities

The ACA and applicable regulations provide categories of entities that may qualify as eligible to receive grants and act as Navigators. At least two such entities must be chosen and one of those must be a community- and consumer-focused nonprofit group. The other entity can be a trade, industry or professional association; a commercial fishing industry, a ranching or farming organization; a chamber of commerce, union, resource partner of the Small Business Administration, licensed agent or broker; or other public or private entity or individual that meets the requirements described below, such as an Indian tribe, tribal organization, urban Indian organization and state or local human services organization.


Provided that the entity fits into one of the categories set forth above, such entity must also (1) be capable of carrying out the minimum duties required by the ACA and applicable regulations; (2) demonstrate to the Exchange that the entity has existing relationships or could readily establish relationships with employers and employees, consumers or self-employed individuals likely to be qualified to enroll in a QHP; (3) satisfy any licensing, certification or other standards mandated by the state and/or the Exchange; (4) be free of conflict of interest issues that would prohibit acting as a Navigator; and (5) comply with the privacy and security standards established by applicable regulations.


Licensing or Certification Imposed by the Exchange and/or the State

Under the ACA and governing regulations, Navigators must receive basic training to ensure that they understand (1) the needs of the underserved and vulnerable populations; (2) the rules and procedures for eligibility and enrollment; (3) the range of public programs and QHP options available through the Exchange; and (4) the manner in which tax information and other personal data must be handled to be in compliance with privacy and security standards. While neither the law nor the regulations require it, the preamble to the regulations encourages Exchanges to implement ongoing training programs and regular assessments of Navigators. It is important to note that the preamble to the regulations also provides that the Exchange cannot require Navigators to have agent or broker licenses or to maintain errors and omissions coverage.


Prohibitions Concerning Conduct and Conflicts of Interest

The ACA sets forth certain restrictions relative to who may function as a Navigator in order to prevent conflict of interest issues. Specifically, a Navigator cannot be a health insurance issuer or a subsidiary of a health insurance issuer or an association that includes members of or lobbies on behalf of the insurance industry. Additionally, a Navigator may not receive any compensation directly or indirectly from any health insurance issuer in connection with the enrollment of any individuals or employees in a QHP or a non-QHP.


The preamble to the federal regulations provides further amplification to these limitations:

Grants or other consideration paid by a health insurance issuer to a Navigator for activities other than enrollment may indicate a significant conflict of interest issue.

Clarification that “consideration” means financial consideration or any other type of incentive that a health insurance issuer could use, including gifts or free travel.

Conflicts of interest occur where a Navigator has a private or personal interest sufficient to influence or appear to influence the objective performance of his duties

The regulations require an Exchange and/or state to establish conflict of interest standards that are to be satisfied by all entities receiving grants under the Navigator Program.


Open Issues Concerning Navigators

While Exchanges and/or states must work within the general framework outlined above, the ACA and applicable regulations leave much discretion to them in designing Navigator Programs. However, Exchanges and states have a number of issues to consider in developing their programs, as outlined in the National Association of Insurance Commissioners White Paper dated June 27, 2012, Marketing and Consumer Information White Paper: Navigators, Agents and Brokers, Marketing and Summary of Benefits and Coverage.


Some of these issues are:

·       Which types of community- and consumer-focused nonprofit groups are best suited to be Navigators?

·       What should be the relationship between the Navigator entity and individual Navigators?

·       What organization will be responsible for training Navigators?

·       What topics should be included in Navigator training programs?

·       What should be the licensing and certification requirements for Navigators?

·       How should Navigator performance be measured?


Eligible Navigator entities should be aware of activity in such areas as they enter the selection process so that they can address these and other issues as they arise.


Agents and Brokers

Under the ACA and applicable regulations, agents and brokers can be Navigators so long as they do not function in both roles at the same time. This is because the ACA prohibits Navigators from receiving compensation either directly or indirectly from health insurance issuers.


As a separate matter, and subject to certain conditions, the Exchange and/or the state can allow agents and brokers to enroll individuals, employers or employees in any QHP that is offered through an Exchange or outside of an Exchange. The Exchange can decide to provide information regarding licensed agents and brokers on its website. Specific rules apply where an agent or broker website is used to select a QHP and an agreement between the Exchange and the agent or broker containing, at a minimum, certain specified conditions must be in place.


The role of agents and brokers compared with the role of Navigators will be a key issue for Exchanges and/or states to decide. Under state insurance law, any person engaged in the sale, solicitation or negotiation of insurance must have an insurance license. Under the ACA, Navigators are charged with “facilitating enrollment,” but this term is not defined. The preamble to the regulations makes it clear that states cannot require Navigators to become licensed as insurance agents or brokers. As a result, states will have to determine the licensing and certification requirements attributable to Navigators who facilitate the enrollment of individuals, employers and employees in QHPs within the context of existing insurance laws requiring individuals who sell, solicit or negotiate insurance to hold an insurance producer’s license.


Scope of Compliance

The information set forth above provides a general overview of the factors that need to be considered in developing Navigator Programs and acting as a Navigator and/or agent or broker offering QHPs through Exchanges. Wilson Elser can assist these stakeholders in completing these matters and responding to other questions that may arise relative to the ACA.


·       For additional information, contact Cynthia at – 518.449.8893 or Sandy  –  518.925.4602



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