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Life Health > Health Insurance > Medicare Planning

CMS increases Medicare plan renewal comp cap

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Medicare program managers now say Medicare Advantage and Medicare Part D prescription drug plan issuers can pay agents and brokers renewal commissions equal to about 50 percent of the first-year commissions.

In draft regulations released in January, officials at the Centers for Medicare & Medicaid Services (CMS) had proposed replacing a three-tier commission structure with a two-tier structure and reducing renewal commissions to 35 percent of a “fair market value” (FMV) figure, from 50 percent today.

In the past, Medicare Advantage issuers could pay up to 100 percent of FMV in the first year, up to 50 percent of FMV in policy years two through six, and 25 percent of FMV for the seventh year and later years.

More than 140 agents, health plans and trade groups wrote to CMS to oppose the 35 percent renewal rate, and no health plan strongly supported the 35 percent renewal rate, officials say in a proposed preamble to final Medicare regulations.

Commenters told CMS that the 35 percent renewal commission would be too low to cover the costs of agent’s selling Medicare drug plans.

Medicare Advantage issuers can still decide whether they want to work with agents and brokers, officials say.

Officials say they still plan to implement a $100 cap on Medicare Advantage producer referral fees that was included in the draft regulations.

The package is set to appear in the Federal Register Friday. 

CORRECTION: An earlier version of this article described the types of products involved incorrectly. The regulations affect Medicare Advantage and Medicare Part D prescription drug plans.

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