E&O and the ACA

The Affordable Care Act (ACA) has created a major shift in the health insurance landscape, forcing independent agents to re-evaluate how they approach servicing their health insurance customers.

Businesses will encounter an increased set of variables to analyze when structuring their health care programs—which means agents will need to know their boundaries and communicate them clearly to manage the expectations of customers.

Here are just a few E&O exposures agents face from the change in health insurance delivery and some risk management considerations that could help prevent E&O claims:

Know thy self. Is agency staff knowledgeable and prepared to assist customers? Does it make economic sense to continue to offer health insurance? Don’t make a guinea pig out of your customers if your agency is not committed.

Will your E&O coverage respond? Find out if your E&O policy offers the appropriate coverage for your health benefits operations. This is especially important for traditional p-c agents that are using the ACA as a springboard to enter the health insurance marketplace.

Don’t dabble. Understanding the insurance plans is not enough. There are thresholds, fines, subsidies and plan requirements to consider. A “loose understanding” of the ACA will not suffice in the face of so many technical requirements. Like in any new area of business, inexperience can lead to significant exposure.

Protect your data. Cyber liability remains a major exposure for businesses that collect, use and store Protected Health Information (PHI) and Personal Identifiable Information (PII). Agents need to understand the data protection standards required by the exchanges and how they relate to other privacy laws, such as HIPAA.

Exit with caution. Should an agency decide to exit the health benefits business, it must discontinue or transition the business in a way that limits liability to future E&O claims. This includes thorough documentation of conversations with customers.

David Hulcher is Big “I” assistant vice president of agency professional liability risk management.