Licensed Medicare agents, or brokers, can help beneficiaries choose the right coverage, but financial incentives also can influence which plans they highlight, according to a Commonwealth Fund blog post.
Riaz Ali, chief executive officer, and Lesley Hellow, business analyst, for the solutions company, Saeidan, write in the post that differing commission rates could force independent agents to choose between their earning potential and helping beneficiaries choose coverage that meets their needs.
The piece examines how Medicare Advantage (MA), Medicare Part D, and Medigap commissions are set. The Centers for Medicare & Medicaid Services (CMS) set maximum commissions for MA and Part and, within that maximum, insurers determine compensation they will pay agents, which may vary by product or contract. For 2022, the maximum national commission for the first time a beneficiary enrolls in an MA plan is $573 per beneficiary for most parts of the company. For standalone Part D plans, the commission is $87 and doesn’t vary by region. After the beneficiary is enrolled, the authors explain that agents earn a lower commission when the member switches to a new plan or stays with the original plan.
Commissions are different for Medigap plans and aren’t set by CMS or individual states. Agents typically receive a percentage of the annual plan premium, a percentage that is set and paid by the insurer. According to the Saeidan analysis, the average premium in 2020 for Medigap was $1,660, which means an agent would receive $322 for the first year and $166 as a renewal commission.
The authors write that the difference in MA and Medigap compensation creates a potential conflict. They recommend that CMS consider setting all commissions to prevent agents from being financially motivated to favor a particular type of coverage. They also question the renewal commission model as agents may have a limited incentive to revisit plan fit.
Click here to read the entire blog post.