Insurance Agent Forum

[patch36]

For those of you who have not read the CMS rules on Compensation, here are the last 4 paragraphs. As you can see it is complicated for the companies. If they paid you $200 commission for a new MAPD, then they would have to commit to paying $100 a year for the next 5 renewal years, for a total of $700. That has to be one of the things they are wrestling with.

An agent’s aggregate first year compensation can not exceed 200 percent of the aggregate compensation in each individual subsequent renewal year, of which there must be a total of five renewal years. (This creates a six-year cycle.) This means that in the first year, the compensation paid can be no more than 200 percent of the compensation paid in the second year or any individual subsequent renewal year up to a total of five renewal years (six year total compensation cycle). The agent will receive renewal compensation for the five year renewal period (years two through six) as long as the member remains enrolled in the plan or enrolled by the agent in a like replacement plan.

Compensation is earned in months 4 through 12 of the enrollment year as long as the member is active with the plan. If an enrollee leaves the plan prior to month 4, no compensation is earned. If an enrollee leaves the plan after month 3, compensation is paid on a pro-rated basis for the months in which the enrollee actually was a member of the plan.

After the 2009 baseline year, no entity may provide, and no agent or broker may receive, compensation greater than the renewal compensation payable by the replacing plan on renewal policies if an existing policy is replaced with a like plan type during the first year and 5 renewal years. “Like plan type” refers to PDP, MA or MA-PD, or Cost plan. Examples of replacements with like plan type are—PDP replace with another PDP, MA or MA-PD replaced with another MA or MA-PD, and cost plan replaced with another cost plan. If a PDP is added to an MA-only plan, then a new commission is paid for enrollment in the PDP.

Plans must establish a compensation structure for new and replacement enrollments and renewals effective in a given plan year. Plans may not alter the compensation structure during the given plan year. Compensation structures must be in place by the beginning of the plan year marketing period, October 1, and must be available upon CMS request including for audits, investigations, and to resolve complaints.
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And the compensation will be delayed for a week. This is from CMS


CMS is reviewing our guidance regarding the payment of compensation in the first year (2009) and working with the industry to determine what ifany changes we can make to continue to reduce churning in 2009. As a result, CMS is deferring the establishment of compensation structures by
October 1, 2008, for 1 week.

[The Rabbi]

In the paper today it was announced that Medicare pulled the plug on an HMO before it's first birthday.

They have more to worry about than agents churning. They might be trying to discourage honest agents from improving client's plan and don't know it.

As usual the gov is guilty of failure to be accountable.

[GreenSky]

Originally Posted by patch36

For those of you who have not read the CMS rules on Compensation, here are the last 4 paragraphs. As you can see it is complicated for the companies. If they paid you $200 commission for a new MAPD, then they would have to commit to paying $100 a year for the next 5 renewal years, for a total of $700. That has to be one of the things they are wrestling with.

You're ALMOST correct.

If they pay $200 1st year, they can pay you anywhere from $100-200 for renewal. The 1st year can be no more than twice the renewal, it doesn't have to be twice.

Rick

[patch36]

Originally Posted by GreenSky

You're ALMOST correct.

If they pay $200 1st year, they can pay you anywhere from $100-200 for renewal. The 1st year can be no more than twice the renewal, it doesn't have to be twice.

Rick

I understand, but what is the likelihood the insurance company will pay more than half if they want to keep first year commissions as high, or even near where they have been in the past. I would not be against a flat $200 for 6 years.
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Originally Posted by The Rabbi

In the paper today it was announced that Medicare pulled the plug on an HMO before it's first birthday.

They have more to worry about than agents churning. They might be trying to discourage honest agents from improving client's plan and don't know it.

As usual the gov is guilty of failure to be accountable.

Next year, if I am with a client that I can improve their coverage, I will not hesitate doing it for the renewal commission rate. Would you walk away from half commission or whatever the renewal rate is? Nope. It will also do nothing to keep a dishonest or unethical agent honest or ethical. If the agent would do something wrong for $400, they will do it for $200 too.

[GreenSky]

Here's the latest bulletin from Pyramid:

Today, the Centers for Medicare & Medicaid services (CMS) announced a one-week deferral of the agency’s previously issued commission requirements for brokers and agents marketing Medicare Advantage and Part D plans. CMS is reviewing its guidance regarding the payment of compensation.

We expect to receive additional guidance from CMS regarding the changes under consideration and how that may impact commissions. Assuming the one week delay stands, we would expect to issue commission schedules around October 8th under the new CMS guidance.

We are sorry for the inconvenience. Obviously this is beyond our control.

[insureyou2@gmail.com]

there will not be a year two or three just hold on the government needs to find 700 billon dollars lets ask the seniors disabled and poor non-working americans to give up health care benefits government is going to mess up alot of people in a hurry.

[retread]

Let's do a little math:

Medicare costs for 2008 = $675 billion (from Medicare.gov)

/ divided by 90 million participants "
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Equals about $7500 per participant, right?

So who gets what? I would guess bureaucrats would take about 30% (typical government graft)....

Subtracting $2250 would leave $5250 to cover each person.

If MAO insurance carriers got this much to administer benefits per person, that would be roughly $437.50/mo. Give an agent one month's revenue income (about 7%) and keep the rest= about $4850/yr. If they contain costs successfully and clear 7% net for themselves, and they have, say, 300K clients, that is $120m annual profit. Out of that, they would have to pay in-house staff, etc. As long as they don't pay astronomical CEO salaries, I'd say they would return a nice share price. Not too shabby!

Could they afford to up the agent commission?... I think so, considering it would mean an increase in sales. But then, I'm no business major.

I admit my weakest point here is the cost of running the business (in-house staff) because this is not my baliwick. Perhaps some business major on the board can make a comment.

[scottfree]

FWIW, I actually heard that the companies were going to up the commissions and that CMS thought they were to high.

My guess is that we will see first year around $400 and renewals $200.

We will see soon enough..