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2 minute read
New Medicare Advantage Regulations
The new Medicare Advantage regulations will eliminate administrative fees, meaning all commissions for MA plans will be standardized to remove marketing incentives that could influence agents to steer consumers to one plan over another. Centers for Medicare & Medicaid Services (CMS) is increasing the commission by $100 to offset the administrative fees.
“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.
CMS further explained that, by eliminating any payouts beyond standard commissions, they ensure compensation reflects “only the legitimate activities required of agents and brokers.” Removing “excessive compensation and other bonus arrangements offered by plans to agents and brokers,” they argue, encourages agents to promote the right plan based on enrollees’ needs and not the agent’s financial interests. CMS believes they are “taking unprecedented steps to address predatory marketing of the Medicare Advantage and Part D programs.”
Policy Persistence vs. New Enrollments
CMS is hoping to reduce MA plan churn by reducing marketing spend. While policy persistency would have a positive impact on carriers, the regulations could negatively impact their ability to bring in new enrollees.
Carriers have been able to pay advances to help marketing agencies promote their MA plans, buy leads, and support agents in advance of actual enrollments. These marketing fees often cover agent travel, training, licensing, and administrative fees. However, these benefits will no longer be available. And, since agents previously earned higher commissions on new enrollments than renewals, the reduced marketing support could result in lower total compensation.
Retaining Agents as Regulations Impact Productivity
As new regulations impact agent productivity and new policy sales, it will be more important than ever for carriers to actively retain their best agents. 76% of agents say that they would do more business with carriers that are easy to do business with, which means carriers need to help agents maintain their total compensation in the face of ever-changing regulations.
Some insurance experts believe that as much as 6-7% of commissions could be lost because carriers have poor data, a significant hit for agents. Reducing or eliminating commission leakage is an obvious first step in helping agents recapture lost income from the new MA commission regulations.
Proactive Support for Agents
The most successful carriers will help agents adapt to new regulations and one way to do this is streamlining the commission payment process and being easy to do business with. See how e123’s Commissions for Carriers solution can make commissions more accurate, transparent, and flexible.
