Insurance Agent Forum

[g1bass]

I have a silly question regarding ma/pds and pdp with no premium. Is enrolling people in $0 premium products considered sales or enrollment? Since a transaction usually means a transfer of some sort of asset, and since the enrollee is not paying the enrolling agent any money are you being paid for enrollments or sales? I know it sound nitpicky but is there a difference in the letter of the law?

[midwestbroker]

I would have to say sale.

While they client is not paying a premium, Medicare is for them. The client is authorizing Medicare to pay the insurance carrier for their health services. So, there is a transaction taking place, just not at the client level per say.

[g1bass]

You have to admit tho, that medicare advantage is very unlike other insurance in many ways. It must be approved and compliant to the Federal government, rather than state gov, which is the point Universal is trying to make vis a vis minimum financial reserves, that as a federally mandated plan it neednt observe Florida law regarding minimum reserves.

[policy doctor]

And, you might add, Medicare has to approve that enrollment. Hence we don't get paid until company has that recipient fully approved.

I caught the reference to Univ Healthcare....and their reserve contention. Any new news on that? I believe FL DOI was using the HMO reserve requirements, which did not apply to them.

Of course, they're not paying us agents yet either.

[Frank Stastny]

Originally Posted by g1bass

I have a silly question regarding ma/pds and pdp with no premium. Is enrolling people in $0 premium products considered sales or enrollment? Since a transaction usually means a transfer of some sort of asset, and since the enrollee is not paying the enrolling agent any money are you being paid for enrollments or sales? I know it sound nitpicky but is there a difference in the letter of the law?

There are no silly questions, only silly people who criticize people for asking questions when they aren't sure of the answer.

Since IRS considers it income, I really think that is the ultimate answer. If an insurance company is trying to consider it as something different it is probably because it is in their best interest and not the agent's.

Doesn't a Med Supp also have the same criteria? It has to be approved and compliant with Fed Govt rules and regulations as opposed to any state regulations. Am I missing something? My "silly question" is, if I am, please let me know. I have never heard that question raised before.

[g1bass]

Yes med sups do have compliancy, many are not guaranteed issue like MA's and many have problems with pre-existing conditions. So are we willing to say they are federally mandated? We get paid per app for enrollment not a commission on the actual amount medicare, right?

[arnguy]

My advice, don't try it! The fee is income and is taxable----transaction or no transaction. The Internal Revenue Code specifically states that all income (which has been defined many times by the courts) is taxable unless specifically excluded in the Code. Some insurers hire enrollers to enroll employees of firms into their plans. The enrollee does not pay the enroller, the employer does not pay the enroller, but you can bet your bottom buck that the fee paid to the enroller by the insurer is considered ordinary income and must be reported as such. AFLAC reps sometimes hire enrollers to do that work for them.

Many tax evaders have tried all kinds of ludicrous arguments why certain income is not taxable. Besides fines, many enjoy the hospitality of Uncle Sam for a couple of years.

[arnguy]

Included among the "tax evaders" are the "tax protesters" who allege the income tax is unconstitutional. Some even write books about it,e.g., Irwin Schiff who I believe is currently residing at one of Uncle's luxury hotels.

[Frank Stastny]

Originally Posted by g1bass

Yes med sups do have compliancy, many are not guaranteed issue like MA's and many have problems with pre-existing conditions. So are we willing to say they are federally mandated? We get paid per app for enrollment not a commission on the actual amount medicare, right?

There are so many "if's" in this subject that can be debated. You can argue that Med Supps are in fact "guaranteed issue" during the open enrollment period since if someone applies for one an insurance company must issue the policy without any questions. In Missouri we have a guaranteed issue each year on the anniversary of the policy.

However, for those replacing one Med Supp with another one generally they will have to answer health questions. That would really create a mess wouldn't it?

I've got to go with Arnguy. Anything you receive including a trip you have won is going to be considered income.

[honestagent]

Back to the OPs question, I consider it both - but first and foremost a sale. For sure. You'd be surprised that sometimes for some people to 'give' something away can be harder than tagging a price tag to the product. Further, spin it how you want, enrollment, transaction, processed, etc. etc. to name a few, I, as other life agents I know, use those terms when selling life insurance with a premium, for example. "I'll be in your area enrolling tomorrow," for example, or "to get the you in the system and have your banking processed at a reduced rate, do you do your banking at a local credit union or regular bank?" So it's a matter of opinion I think but anytime there's some kind of product with consumers and an exchange is made = sales. Some would say bartering is even sales... I tend to agree. What do you all think?

[midwestbroker]

I would consider bartering more along the lines of trading, which may or may not change your finances. If you trade 2 $5 bills for 1 $10, you still have $10.

Now there is the whole emotional value that can only be determined by the owner and the IRS (just kidding).

[Slick]

I noticed today on Coventry's broker website. They offer "sales training", "sales aids", etc.
So says the Coventry horse.

[g1bass]

The question is not if it is income, but is it commission or enrollment fee. A commission as I understand it is a percentage of sale, whereas an enrollment fee is just that a flat fee based on enrollment. In my eyes whenever you say the word commission it entails sale, whereas as enrollment fee is just that. I know its splitting hairs, but its also perception. Have you been reading any of then bad press our industry has been getting from the media these past two weeks regarding MA's. I really believe to be effective next year and the rest of this year we are going to have to reframe our value propositions and craft them more wisely.

So what's what we should be doing is acting as Medicare Advantage Outreach Counselor,and be right up front with people in the beginning we are here to educate you and enroll you, and as a result of this we will be compensated with an enrollment fee. I am very comfortable referring to myself this way, perhaps because I worked at a Senior Insurance marketing organization that bullied and pressured old people, by doing things like enrolling medicaid people in PFFS' and taking money for annuities from seniors who had just obtained reverse mortgages. I want to distance myself as far as possible from those scumbags. I was also told by the same organization that I was an independent agent and rushed through the contracting process only to find I'd signed a non compete clause. My own stupid fault, they promised pie in the sky, and delivered bupkiss. Now all the nice people who I worked very hard to service and do right by, are their clients. Ok, I'll stop whining now.

[arnguy]

G1bass, sorry, I guess I read too much into your original question. I had assumed that your differentiating sale vs. enrollment and the fact that the enrollee did not tender any consideration in the transaction raised a question of the taxability of the income. Whether you describe the transaction as a sale or an enrollment is irrelevant from a tax viewpoint. It is merely semantics, and I would not be concerned about it unless your state DOI has some regulation as to the characterization of the emolument paid and whether or not it has to be disclosed to the enroll as commission paid or fee paid. Notwithstanding the aforesaid, my advice to you is "not to worry."