Understanding Medicare Commissions - Western Asset Protection
Understanding Medicare Commissions

Understanding Medicare Commissions

As a new Medicare agent, you work hard to establish yourself and build your business, which involves actively cultivating leads and setting appointments. As busy as you are, don’t overlook the importance of understanding how your commissions work to ensure you receive the correct payment for your sales.

2024 Medicare Advantage and Part D Commissions

Agents selling Medicare Advantage and Part D plans receive a flat amount per enrollee. CMS determines the maximum amount insurers may pay agents, although carriers may choose to pay a smaller amount. What you earn depends on your contract with each carrier. CMS adjusts the maximums yearly based on the cost of living, meaning they vary by state.

You receive higher commissions for first-time enrollments and new “unlike plan” enrollment changes than renewals or “like plan” enrollment changes.

Medicare Advantage:

  • Initial Sale: $611 per enrollee per year
  • Renewal: $306 per enrollee per year

Medicare Part D:

  • Initial Sale: $100 per enrollee per year
  • Renewal: $50 per enrollee per year

2024 Medicare Supplement Commissions

CMS does not set a maximum commission for Medicare Supplement plans. You will earn a percentage of the premiums of the policies you sell. These percentages vary based on the state, type of plan, and carrier. You can typically continue to earn renewal commissions for at least six years, although these might be at a lower rate than the initial year. In some cases, commission payments end after a set period of time, making it essential to know the details of each carrier’s commission structure.

The Importance of Tracking Your Commissions

You should not assume that insurers will pay you correctly. You need to dedicate time to tracking your sales, including the policy type, the carrier, the effective date, how much you received, and the date of payment. You usually won’t receive payments in one lump sum. Instead, you may receive partial payments over a period of time.

Missing or delayed payments may happen for several reasons. For instance, the carrier may be behind on payments, or your client may have cancelled their policy directly with the carrier. It’s also possible the policy did not go into effect because you did not submit it correctly. Make it a habit to follow your enrollment applications through the system to ensure there are no issues since this can impact you and your client.

Although you could track your commissions manually using a spreadsheet, this will become too time-consuming as your business grows. Using software specifically designed for tracking commissions is more efficient. This will also make it easier for you to analyze your business and determine which products are generating the most income, which will help you decide where to direct your efforts and forecast your income.

How Chargebacks Work

Sometimes, when a client cancels a policy early, you will have to pay back some of your commission. Chargeback rules vary depending on the type of product and the exact scenario.

One example would be if your client enrolled in an MA plan during AEP, then disenrolled during OEP, and chose a new MA plan with a different agent. If you were paid part of your commission in January, you would have to pay it back.

Chargebacks occur less frequently with Medicare Supplement Plans. Most agents opt to receive their commissions as earned, meaning you receive payment as your clients pay their premiums. In this case, there is usually no chargeback or only a small one. However, if you have chosen to have your commission advanced before you have earned it, you may owe money back.

Occasional chargebacks are inevitable. Make sure you work with your carriers to pay them back in a timely manner. Minimize the number of chargebacks you face by staying in touch with your clients to find out if they are happy with their plans or thinking about making changes.

CMS Proposed Ruling for 2025

CMS has proposed some changes to agent compensation for 2025. They want to set a clear, fixed amount that agents and brokers earn regardless of the type of plan. This will address the concern that agents may recommend plans based on higher commission rates instead of thinking about the client’s best interests. Expect to hear more about this issue in 2024.

The experienced team at Western Asset Protection is available to help agents who are new to Medicare sales. We offer hands-on support to start strong and achieve financial independence. Contact us today.