Federal regulators have set tight rules for agent compensation at Medicare Advantage plans — but most of the issuers are interested enough in new business that they will pay some compensation to agents.
(Related: The Medicare Plan Market Is Alive!)
The Centers for Medicare and Medicaid Services (CMS), the federal agency in charge of the Medicare Advantage program, tells the tale in two spreadsheets it has posted in the agent broker compensation section on the Medicare managed care marketing section of its website.
Issuers said they pay no commissions for some sales of 69% of the plans. In many of the zero-commission scenarios, the issuers pay a $100 referral fee.
The issuers said they pay at least some sales compensation, rather than just a referral fee, in some cases for more than 96% of the plans on their shelves.
We came up with the compensation averages below by taking the 2018 and 2019 spreadsheets and calculating simple averages for each column of compensation figures. The averages for each column include both blank cells and cells with a $0 compensation figure entered. The sales compensation averages do not include any adjustments for referral fee payments.
New Sales, low comp level: $101, for 2019, from $114, for 2018.
New Sales, high comp level: $453, for 2019, from $436, for 2018.
Renewals, low comp level: $48, for 2019, from $56, for 2018.
Renewals, high comp level: $225, for 2019, from $216, for 2018.
The CMS Caps
CMS tries to hold down the share of Medicare Advantage premiums going to producer compensation by setting limits on producer compensation, both for new sales and for renewals.
The limits are higher in California, Connecticut, New Jersey, Pennsylvania and the District of Columbia than in the rest of the country.
Here’s what happened to the caps, in most of the country:
New Sales: $482 for 2019, up from $455 for 2018.
Renewals: $241 for 2019, up from $228 for 2018.
Actual Compensation Levels v. the CMS Caps
Here’s how the average high comp levels compared with the CMS caps:
New Sales: 94% for 2019, down from 96% in 2018.
Renewals: 93% for 2019, down from 95% for 2018.
The CMS Medicare Advantage producer comp spreadsheets are available here.
— Read Web Health Broker Gives Peek at Per-Enrollee Commissions, on ThinkAdvisor.