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New Medicare Advantage Regulations Overhaul Agent Commissions

New rules published April 4 that regulate Medicare Advantage (MA) plans and Medicare Part D plans will have a big impact on the MA world as we move into the 2025 contract year.

These rules announced by the Centers for Medicare & Medicaid Services (CMS) will affect agent compensation because commission rates will change and become more standardized and administration fees paid to agents will be eliminated. Let’s take a look at these changes, how they affect agents, and why regulators support these changes.

Paid Fixed Amount for All Policies

The CMS has now established a fixed amount a Medicare Advantage plan can compensate a broker or agent. All plans will pay the same amount of commission for the sale of an MA policy. Commissions will be higher for new enrollments and lower for renewals but the same for each plan.

Regulators are seeking to eliminate what they call “excessive compensation” that could steer agents to offering one plan over another.

“Establishing a set amount a plan can compensate an agent or broker will protect Medicare Advantage and Part D plan enrollees, and prospective enrollees, from anti-competitive steering, to help these individuals find the plan that best suits their needs rather than being steered into options based on financial incentives to agents and brokers from insurance plans,” according to a CMS news release.

In what is good news for agents, the CMS has increased this fixed amount paid as commission for a new MA enrollment by $100 for the upcoming year.

Ending Payouts for Administration Fees

Agents and brokers can no longer be paid by insurance companies for what has been termed in the past as “administrative fees.” These payouts often covered costs associated with agent travel, training, licensing, and administrative support.

MA insurers can no longer pay agents anything beyond the standard commissions. According to the CMS, “(The rules) ensure that agent and broker compensation reflect only the legitimate activities required of agents and brokers, by broadening the scope of the regulatory definition of ‘compensation,’ so that it is inclusive of all activities associated with the sales, to enrollment of an individual, into a Medicare Advantage or Part D plan.”

Using the Term ‘Guardrails’

Upon announcing these changes, the CMS has often used the word “guardrails” to explain why changes were made and this term has been used now in media reports. The CMS views these compensation changes as new barriers that will now protect consumers.

“However, excessive compensation, and other bonus arrangements, offered by plans to agents and brokers can result in individuals being steered to some Medicare Advantage and Part D plans over others based on the agent or broker’s financial interests, rather than the prospective enrollee’s health care needs,” the CMS said in a recent news release.

Grow with Agility in 2024

Agility is constantly updating our agent partners on changes in the health insurance industry so that you have the best information available to help your clients. We offer top commissions, training, administrative support and many other services to help you succeed. Find out how to partner with Agility by contacting us at 866-590-9771.

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