He made his comments at a hearing of the House Subcommittee on Health, Employment, Labor, and Pensions this week on behalf of the Council of Insurance Agents & Brokers.

Donahue reports that employers are saying the complexity of the grandfather rules are making them hesitate to make changes in their healthcare plans “for fear of running afoul of these rules.”

Donahue adds, “All of this complexity costs employer health plans time and money.”

He explains that under PPACA, group health plans that existed on or before March 23, 2010 are “grandfathered” and therefore exempt from some of the new PPACA requirements provided that the grandfathered plans comply with certain constraints imposed by the Department of Health and Human Services, the Department of Labor, and the Treasury Department.

But, he said, many clients—particularly those with 50-100 employees—do not have the administrative resources and expertise to make the requisite grandfather assessments.

“Many of those client-employers are now actively evaluating whether to abandon offering these benefits altogether as they see the costs of compliance skyrocketing while at the same time wondering if they'll be able to absorb the costs for additional requirements being implemented starting in 2014,” he says.

Of concern to producers, Donahue says the Council supports H.R. 1206, the Access to Professional Health Insurance Advisors Act of 2011.

The bill, introduced by Rep. Michael Rogers, R-Mich., would exempt agent commissions from the MLR provisions of the PPACA.

“There's concern among health-insurance agents and brokers about the impact the MLR will have on their businesses and their jobs, as carriers cut back and restructure commissions to meet the MLR's administrative cost caps,” Donahue said.

Employers fear the ramifications from the loss in income could be that producers will leave the business, denying employers access to the professional advice they've come to rely on while navigating through the difficulty of PPACA requirements.

He says the disincentives created by the MLR provision may force some health-insurance carriers to leave the market because they're unable to meet MLR requirements.

Gracie-Marie Turner, president of the nonprofit Galen Institute, also criticized the MLR, saying this “clumsy rule” is “shoving aside agents and brokers” who not only “help individuals and small businesses find the most appropriate and affordable policy” but also help companies establish wellness and disease-management programs and navigate the often-complex claims process.

“They are a crucial element in the equation of helping businesses find the most appropriate and affordable health policies for their employees,” Turner says.