If you’re considering selling Medicare, you likely want to know how much you can earn from it. We’re covering the basics, including how working with an FMO can affect your commissions, to give you a good idea!
Let’s get right to the facts and figures.
How Much Does an Insurance Agent Make on Medicare Sales?
Generally speaking, agents earn two types of commissions selling Medicare plans: a flat dollar amount per application (Medicare Advantage and prescription drug plans) or a percentage of the premium sold (Medicare Supplements).
Medicare Advantage and Part D Commissions
Agents selling Medicare Advantage and Part D plans get a flat dollar amount of money per application. This comes to them in the form of initial commissions and renewal commissions. Carriers pay out initial commissions when an agent makes a new sale or when the beneficiary enrolls in a new, “unlike” plan (different type). Each year and beyond, carriers pay out renewal commissions to the agent if the beneficiary remains enrolled in the plan or enrolls in a new, “like” plan (same type).
In 2021, the national maximum broker compensation for MAPDs is $539 for initial sales and $270 for renewals. The 2021 PDP national maximum broker compensation is $81 for initial sales and $41 for renewals. Keep in mind that, if you’re selling a Medicare MSA plan, you could have the benefit of getting commissions for both plan types, MA and PDP! (Medicare MSAs don’t include prescription drug coverage, so you can sell a PDP with those MA plans.)
The Centers for Medicare & Medicaid Services (CMS) set the maximum broker commissions for Medicare Advantage and Medicare Part D annually; however, insurance carriers aren’t required to pay these amounts. What you earn for Medicare Advantage and PDP sales could be less, depending on the carrier and your contract with them.
Medicare Supplement Commissions
When selling Medicare Supplements, agents earn a percentage of the premiums of the policies they sell. Unlike with Medicare Advantage and Part D, CMS does not set a maximum broker commission for Medicare Supplements. These commissions also vary from carrier to carrier and contract to contract.
Potential Medicare Commissions Calculator
Our expert staff has developed a Potential Medicare Commissions Calculator for 2020 maximum broker MAPD and PDP, Medicare MSA, and Medicare Supplement commissions for street level agents in all states except CT, PA, DC, CA, NJ, and PR. If you haven’t sold Medicare products before, this a great way for you to see the immediate opportunity you’d have to offer Medicare plans to your current book of business! You can also calculate your potential MAPD residual commissions to get an idea of their lifetime value.
Note: Commissions, especially Medicare Supplement commissions, have a lot of variables, such as the carrier, plan, state, and other specifics of enrollment. This calculator is only to give agents an idea of their earning potential.
Commissions With an FMO vs. Without an FMO
Carriers pay agents for the business they write, even if those commissions go through an FMO first (scroll down for a note about assigned commissions). It’s important for agents to know that carriers pay agents and FMOs separately. Your relationship with an FMO is comparable to your clients’ relationship with you. You don’t pay anything to the FMO, just like your clients don’t pay anything to you. You earn your commissions from the carrier, just like the FMO earns their override from the carrier.
So, what you earn working with an FMO is no less than what you’d earn working without one. In fact, we think that you have the potential to earn more commissions with an FMO! There’s a lot of value in the training and back-office support that an FMO can provide agents with licensing, contracting, leads, marketing co-op, sales tools, submitting business, supplies, commission tracking software, etc. That additional support could lead you to make more sales. Additionally, many FMOs are usually able to offer agencies higher-than-street-level commissions!
A Note About ‘Assigned Commissions’
Oftentimes, an agent working with an FMO will receive commissions directly from the carrier. In select cases, an FMO may want agents to “assign” them their commissions (e.g., if they provide the agent with leads, advances, etc.). In others, the carrier may require agents to assign their commissions to their FMO (e.g., the carrier only pays direct contracts). When you assign your commissions to the FMO, this means the carrier will pay the FMO, who will then pay you. Agents signing an Assignment of Commissions contract must be careful, because depending on their contract, their upline could keep their renewals should they choose to leave.
Note: In cases where you must sign an Assignment of Commissions contract with Ritter, it is an immediate vested contract, meaning that any money you make is yours!
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Selling Medicare can be very lucrative, if done right. Hopefully now you have a better idea of how much Medicare agents can make and know that working with an FMO should never hurt your commissions, only help them grow!
Looking to join or switch FMOs? Here’s a list of 10 things you should consider!