Medicare FMO Compensation
The amount of Medicare FMO compensation can vary depending on the type of initial contracting between the agent and FMO. The two main commission arrangements are direct pay and LOA/commission assignment. It is important to understand the rules when contracting.
Medicare FMO Compensation: Full commission/Full Street direct pay
The best set up for an independent agent is full street commission on a direct pay basis. This means the commissions will come directly from the insurance carriers to the writing agent or writing agents agency. Under this arrangement, the insurance company will pay the compensation to the agent. The upline/FMO will have no influence or say in how/when the commission is paid and also will not determine the amount. The term “street commission” is being applied to any situation when the agent is getting the full pay an agent would get direct with the carrier. This type of contract means the agent will own the book. All initial commissions and renewals will move with the agent if they go to a different up-line/FMO. With Medicare Advantage and PDP plans, the agent should be getting the same commission as the max allowable CMS compensation.
Advantages of full comp direct commission
- Agent will own the initial compensation and the renewal payments
- Commission will go to the agent directly from the insurance carrier
- If the agent leaves, they will still receive all commission
- The agent will own the book and can sell it if they would like
- Easy for the agent to see they are getting the full allowable amount on Advantage and PDP plans
Medicare FMO compensation: LOA or commission assignment
The other type of most common contract is the licensed only agent “LOA” or commission assignment contract. Under this type of contract, the up-line receives commission from the insurance carrier and then pays the agent. This is most common with in house or salaried agents. As a result, the FMO will determine how much commission is paid to the agent. The amount may be the CMS max allowable compensation or it may be below the max. (CMS sets the max commission for MA/MAPD and PDP but not for Medicare supplements)
- The upline may give the agent access to leads or a book of business.
- The agent may have an office space and may also have access to daily product and sales training as a result
- The agent receives compensation from the up-line and will be dependent on them to receive sales commission.
- They may be receiving an amount below the maximum compensation or max they could receive direct with the insurance carrier
- If the agent leaves the organization, they may not receive their renewal commissions
- They do not own the book and would not be able to sell it if desired
Crowe and Associates is a Medicare FMO offering a free lead program, online enrollment and direct pay contracts