If you’re looking to enter the under-65 insurance industry, but not quite sure if it’ll be a worthy endeavor, worry no more! We’re here to break down the basics of Affordable Care Act (ACA) commissions.
The ACA market has great potential to be lucrative for insurance agents! Marketplace commission levels vary based on a number of factors, but this means you can customize your own ACA path and the commissions you can earn. Further, a June 2022 ruling from the Centers for Medicare & Medicaid Services (CMS) creates more opportunities for agents to earn even more commissions.
Let’s look at the details of agent compensation for ACA sales.
How ACA Commissions Are Paid
ACA commissions are paid monthly to agents selling ACA insurance. Carriers typically pay these out early in the month, though it can vary. Commissions earned in the last month are paid as long as the member has paid their premium and it has been posted to their account. If this has happened, you can expect to see your commissions soon!
What Affects Under-65 Commissions?
Because the ACA does not explicitly state what agents can or should earn, commission levels can vary by state, how many household members are enrolled in coverage, and the type of plan sold to a client. There are many possibilities to earn commissions, and we want to make sure that you’re aware of not only the amazing potential under-65 insurance has, but what affects it!
ACA commissions vary by state; each state has guidance regarding how much agents can earn selling individual health insurance. The Kaiser Family Foundation published a map showing individual broker market compensation by state for 2020. Insurance agents in Nebraska selling under-65 insurance can earn an average of $23.54, per member, per month (PMPM)! The per member, per month structure creates even more opportunities to make the most of ACA sales!
Please remember that the ACA market continues to change and adapt to the current circumstances and agent commissions are no different! Commissions have increased since 2017 and continue to remain competitive. For example, commissions in Nebraska have increased every year.
|Year||Agent Commissions PMPM|
Commissions Per Member, Per Month
When selling ACA insurance, agents earn commissions per household member, per month. If you enroll multiple household members in a plan, you can collect commissions on each household member, every month! Commissions can also be paid Per Contract, Per Month (PCPM). If the plan operates on this payment schedule, you will be paid one flat rate for all members enrolled in a plan. PMPM continues to be the most common commission payment structure.
The year that a client enrolls in coverage, you’ll receive initial commissions. Every year following the first year is a renewal year, which means you’ll receive renewal commissions. Initial commissions are typically higher than renewal commissions, so don’t be surprised when the renewal year comes around and your commission rate is not as high as the year before.
For each household enrolled in marketplace coverage, if you enroll multiple household members in a plan, you can collect commissions on each household member, every month!
The Plan Sold
Commissions can also vary depending on the plan sold. Health Maintenance Organization (HMO), Preferred Provider Organization (PPO), and Exclusive Provider Organization (EPO) plans reward commissions to agents based on different percentages. Commissions also vary from carrier to carrier. Pay attention to the commissions you earn depending on the plan that your client enrolls in. Remember, slight differences in plans can explain some of the variances you see in commissions each month.
How Much Can Agents Earn Selling ACA Plans?
To give you some perspective of the potential commissions you can earn by selling marketplace insurance plans, we’ve taken the time to break down one example agent’s earnings for the month. Jim, an independent insurance agent in Illinois, earns an average of $22.66 PMPM for each individual health policy sold. Jim has a new ACA client — a 43-year-old mother with two children who also need health insurance. That means that Jim could earn $67.98 for their family, every month. For one year, that’s $815.76!
ACA commissions can add up quickly, and if your client remains enrolled in marketplace coverage, you can continue to earn commissions PMPM. Additionally, many carriers offer production-based bonuses during the Open Enrollment Period (OEP), increasing your earning potential even more! We’ve previously reported on the possibilities that come with selling marketplace insurance plans. Read the article here!
OEP vs. SEP ACA Commissions
In the past, some carriers have paid commissions during the OEP and Special Enrollment Periods (SEPs) differently. This should no longer occur.
On June 7, the CMS stated in an FAQ document that commissions must be equal for OEP & SEP sales. CMS reasoned that marketing practices that discourage agents and brokers from enrolling customers in ACA plans during SEPs is a discriminatory practice.
CMS reasoned that marketing practices that discourage agents and brokers from enrolling customers in ACA plans during SEPs is a discriminatory practice.
We cover this update in more detail in another post. Make sure to subscribe the Agent Survival Guide blog to stay up to date with the most recent changes in the insurance industry!
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Ritter has a dedicated under-65 Sales team committed to supporting you throughout your ACA journey. Register with our site to gain free access to our full library of tools and resources and then get in touch with your local under-65 sales specialist to start earning more selling ACA insurance.