How much do Medicare agents make
We get the question; how much do Medicare agents make, quite often. The answer depends on a lot of different factors which we will review below. This post should give those looking into Medicare sales a good understanding of how much they can make from Medicare sales.
The first topic is the actual commission payments amounts. CMS sets the max allowable commission an insurance agent can make from an MA, MAPD and PDP sale. The max compensation per sale has gone up 5 years in a row. Please note, Medicare supplement plans are not regulated by CMS and are not part of the CMS set compensation schedule as a result. Not all companies will pay the max allowable compensation but as of the creation of this blog, most do.
How much do Medicare agents make: How commission is paid
Typically, both Medicare Advantage and Medicare Part D plan commission payments are paid one year in advance. In other words; the companies pay the full year’s commission up front. The renewal on Medicare Advantage and PDP plans are half of the initial commission payment. Most companies pay renewal commission on an as earned basis. As a result, after the agent receives the first year’s commission, they will receive renewal payments monthly starting in January. However, agents may receive MA and PDP commissions in 3 different ways. The way they are paid depends on the type of MA or PDP sale that was made. As the video will show, MA and PDP payments can be subject to pro-rated payment based on when the plan was sold.
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How many sales can be made?
The amount of sales a Medicare sales agent makes can vary greatly. There are several things this depends on including; the skill of the sales person, type of marketing, hours worked per week and access to natural markets. Some agents can sell only a few plans a year while others will send 300+ a year. The biggest challenges for a Medicare sales agent is learning enrollment rules, plan designs, certifications and marketing. The most challenging is the marketing. The most astute and prepared Medicare agent will not succeed if they do not have a solid marketing plan. This is the greatest challenge in any type of sales and especially any type of insurance sales.
Lets say an agent is able to sell 80 MAPD plans a year in PA. Of those sales, we will assume 50 are new to Medicare and the other 30 are changes from one MAPD to another. Here is how the compensation to that agent will look over the course of 4 years:
Year 1: 50 new sales $607 x50 = $30,350 30 MA to MA sales $270 x 30 = $8,100 Total commission is $38,450
2nd year: Same new sales as above for $38,450 plus renewals from previous year (80 x $270) = $21,600 Total of $38,450 + $21,600 = $60,050
3rd year: Same new sales as above for $38,450 plus renewals from previous 2 years (160 x $270) = $43,200 Total of $38,450 + $43,200 = $81,650
4th year: Same new sales as above for $38,450 plus renewals from previous 3 years (240 x $270) = $64,800 Total of $38,450 + $64,800 = $103,350
Renewals play a huge role in the annual income a Medicare agent makes. Consistent production over a number of years can result in very large incomes. It is not uncommon for an individual agent to have over 1,000 clients on the books yielding an annual renewal income over $270,000. However, the average agent who has been in the business for 5 years or more will have about 400 to 500 clients.
How much do Medicare agents make: Medicare Supplements (Also called Medigap)
The CMS does not set Medicare supplement compensation. As a result, there may be a big difference in payment amounts from one carrier to another. On average, Medicare supplements pay between 15% to 26% of the annual premium. This depends on both the plan and the company. Some carriers pay the commissions as earned but the majority pay on a 9 month advance with a few paying up to a 15 month advance. Most supplement sales are also accompanied by a PDP sale which pays an $81 commission per case with a $41 renewal.
Medicare sales is lucrative for those that have an effective marketing strategy and stay in it for the long term. Most insurance agents will sell other products in addition to Medicare plans such as Final Expense, Life, Annuities, DI, P & C and ancillary products such as dental plans. A number of those products pay a large commission in the first year with a much lower renewal. Those products can be important to boost compensation in the first few years of selling Medicare while the renewal income is building up.