Medicare Sales Contracting Guide
The Medicare sales Contracting guide lists every step you need in order to be successful selling Medicare products. The guide will take you from the basic parts of Medicare sales to the most complex sales concepts. This information is focused toward the independent agent. In other words, an agent that will own their own business and work as a General Contractor. The post will not focus on those that want to work as a sales person at an insurance company.
The concepts in this guide will certainly help the internal company sales person but it does not focus on that model of sales. Most of the steps below include a recorded webinar and power point that you can review for further understanding.
Follow the steps below and let us know if we can help along the way. Crowe and Associates provides agents with training, contracting, ongoing support, online quoting tools and a free lead program. If you are brand new to Medicare sales, call us to learn what a career in Medicare sales is all about. Would you like a quick outline of how to get started?
Medicare Sales Contracting Guide topics:
- The good and bad of Medicare sales: Is Medicare sales right for you?
- Medicare basics
- Determine what and how you want to sell
- Get started with contracting: Companies and plan types to sell
- Contracting and annual certifications (Click here for contracting kit)
- Marketing and generating sales opportunities
- Sales Presentation (face to face)
- Online quote engine (provided at no cost to you)
- Free Medicare Lead program and types of leads
- Maintaining and growing your book
- What is a General Agent (GA) and do you want to be one?
1: Medicare sales contracting guide: The good and bad of Medicare sales:
Medicare sales is similar to most sales careers. There are challenges when you start to learn about the products and sales concepts. It can also be difficult to get yourself set up and organized. You must also develop a routine and get comfortable when you talk about the products with clients. This is common with most sales types but the biggest challenge with any type of sales is to get in front of enough qualified prospects to make it work. To this day, that is the most common complaint/question I hear from agents.
A majority of agents cannot get enough sales opportunities. The guide will address marketing later on but for now it is important to understand that getting in front of enough people will be one of your biggest challenges.
There are certainly a number of reasons why someone would want to have a career in Medicare sales. The first is that you really are not selling anything. People are going to enroll in some type of Medicare program (MAPD, Medicare Supplement, Medicare PDP plan). You do not need to sell them on that concept because they usually already know they need a plan. Your role is to walk them through the process and explain the choices they have.
Once they make a choice they can work through you (as their agent) at no cost to them. The monthly premium is the same with or without you as the agent. Medicare sales is more like a consultation than an actual sale.
Real sales come into play when you try to convince someone to buy something they should have but do not have to have.
Examples are Long Term Care, Life Insurance, Annuities, etc. These Products may require you to convince the client of their use and are considered emotional sales. Like Auto and Home insurance, Medicare is something they must have so there is no convincing needed.
Medicare Advantage and Part D Rx plans require annual online certifications that must be completed with every carrier every year. That can be a time-consuming task that some people are not willing to do. There is also a large learning curve for the agent that works in Medicare. You have to fully understand Medicare and the plans in order to be able to show prospects what they need.
Also on the good side is the recurring commission/revenue that your Medicare book of business generates. Once you build up a large number of clients, their renewals (Medicare plans offer very high renewal compensation) will become your primary income. You will not need to sell every day in order to receive a paycheck. A very diligent and successful agent will build up a book of business of 500 clients in 2 to 3 years. A book of 500 clients will generate $120,000 a year in renewal income alone.
Medicare sales can be very profitable and once a book of business is created.
Renewals will create substantial recurring revenue. Most agents that are successful in Medicare sales realize that time, effort and patients will be needed in the first year or two while they learn the ropes and build a book. Those that have that patients are rewarded with a career that can earn them much more than could be made working for a company.
2: Medicare sales contracting guide: Medicare basics: Original Medicare
In order to be successful selling Medicare, it is vital that you understand how original Medicare works. If you do not understand original Medicare it difficult to explain to others. It is also important to know Medicare A and B so you can help explain how a Medicare supplement, Medicare Advantage and Medicare Part D plan work with Original Medicare.
Medicare A and B: People become eligible for Medicare A and B the first of the month they turn 65. Everyone is automatically enrolled in Medicare Part A. They are also auto enrolled in part B if they are drawing Social Security payments at the time they turn 65. There is a standard cost of $134 a month for part B. It is taken out of the Social Security check every month. If the person has not elected Social Security payments yet, they are billed quarterly.
Here is a link to the Medicare A and B benefits for 2018:
3. Medicare sales contracting guide: Determine what and how you want to sell
This is a big topic but its important to figure out what type of medicare plans you will offer and how to market them. Ideally, it would be best to offer Medicare Advantage, Medicare supplements and Medicare Part D Rx plans with all of the competitive companies in the area you will sell in. This is ideal because it gives you the most flexibility with the client/prospect and help to ensure you will be able to find the right fit for them 99% of the time. While this is idea, not all agents do it this way for a couple of reasons.
Note: We have an online enrollment platform called Connect4Medicare CLICK HERE TO LEARN MORE
- Medicare Supplements do not require any annual certifications but Advantage plans and Part D Rx plans do. An annual product certification is required for each companies advantage plan and Part D Rx you sell. This can become very time-consuming. Most of the companies also require you to do an annual AHIP certification if you want to sell their Advantage and Supplement plans.
- The more companies you offer the more difficult it is to keep all the benefits, rules and intricacies of each one straight. MAPD and Part D plans also have a number of rules that must be followed in order to market them in a compliant manner. Medicare supplement plans do not follow such rules and also do not require annual certifications.
Sell supplements only to avoid certifications
Some agents sell only Medicare supplement plans to keep things simple. It is a fine strategy to use but you will certainly be walking away from sales by not offering part D Rx plans or Advantage plans. On the other hand, offering supplements only mean you do not need to deal with questions about benefits, certifications or rules of engagement. This really comes down to a matter of preference. Some agents start with one or two companies, get the hang of the business and then start adding additional carriers a the year goes on.
4. Medicare sales contracting guide: Compensation
Compensation is straightforward on Supplements in most cases. Many of the companies will pay a commission based on a percentage of the premium. The percentage ranges from 12% to 20% depending on the company and supplement you sell. Most carriers will not pay a comp or will pay very little comp on any Medicare eligible applicant under the age of 65.
Most companies will pay an advance on the premium of 9 months and they all usually pay renewals at the same rate as the initial compensation. Make sure you get a contract with at least the street rate commission level and also ensure that they insurance carrier will be paying you directly. Some Medicare supplement companies will only pay commission for a set amount of years. 6 years is common with those that limit payout years. Medicare supplement usually pay fairly quickly as you get the comp within a few weeks of the sale.
Medicare Advantage and Medicare Part D rx commissions are set by the government (CMS) every year.
It makes it pretty easy to know what the payouts for an Advantage or Part D sale will be in any given state in any year. CLICK HERE FOR THE 2019 MAPD AND PDP PAYOUT AMOUNTS
A few things to keep in mind, when you sell a Medicare Advantage plan to someone who does not currently have a MAPD plan, you will get the full allowable payout. If you sell to a person that already has an MAPD plan, you will get a 1/2 payout of the full comp. All renewals pay at 50% of the full comp.
Most companies pay commission out in a week or two after you write the case.
Most companies do not make you wait until the plan is effective to pay you. During the Medicare OEP, the companies will hold all commission payments for cases in OCT, NOV and DEC and pay them out in January. During the year, the companies will also pro rate the commission payments but your renewals will start in January regardless of the month you placed the case.
5. Medicare sales contracting guide: Getting started with contracting: Companies and plan types to sell
It is important to know which types of plans you want to offer and the companies. There are a lot of options but we will narrow them down.
Ideal scenario –
- would be if you are appointed with all the competitive companies for Medicare Advantage, Medicare Supplement as well as Medicare Part D. If there are 5 carriers who offer the best plans and prices you want to have all 5 of them to offer your clients. Although This is the best scenario, it takes a lot of work. The Medicare Advantage plans and Medicare part D plans will require annual certifications online. You will also need to take AHIP every year. This is required for both part D as well as MAPD plans. It is also challenging to be familiar with all the companies rules, benefits, forms, etc. Many brokers use this strategy and they are almost always able to find the right product for a prospect as a result.
Offer the 2 most competitive companies-
- Offering the 2 best carriers keeps it a bit simpler. You will still need to do the annual certs and the AHIP but working with only two companies makes it easier to be familiar with them. If you are lucky, the two best offerings for Medicare Advantage will also be the companies with the best Medicare supplement rates and decent part D Rx plans.
Offer Medicare supplements only-
- Supplements do not require AHIP, do not have the marketing rules that MAPD and Medicare Part D have and most do not require an annual certification. You will be walking away from sales as some people will only want an MAPD plan and you will also not get the part D Rx plan sales (most clients will buy a part D plan along with a Medicare supplement) but things will be very simple. Once clients go on a supplement plan they tend to stay there and you will not need to do anything to renew them every year.
6. Medicare sales contracting guide: Contracting and annual certifications
Complete contracting: We have one contract that can be used to be appointed with most companies. Filling out the single contract allows us to appoint you with any company you like now and any time in the future you want to add additional carriers. CLICK THIS LINK FOR CROWE AND ASSOCIATES CONTRACTING 2019
You can send completed contracts back to us either by fax at 203-567-6235 or email to [email protected]
If you are an individual, you can fill out a contract with your personal information and a void check to the account you want commission to pay to. Also include a copy of your E and O insurance and insurance license.
If you are going to contract as an agency, there are a few things to know. The first is that any agency that will be contracted must have an insurance license. You also need to have an agency principle. That person must be licensed as well. IMPORTANT: The principal of the agency must be licensed AND certified in order for the agency to receive commission payments. This is true for both Medicare Advantage and Medicare part D plans. If the agency principle is not willing to do the certifications, have someone different listed as the principal on the contracting that is willing to do the certs.
Agencies can have all commissions from their employees or producers pay to the agency if they choose.
They can do this through a commission assignment form which can be completed by each employee or producer at the time of contracting. Agencies can also have the street level commission pay directly to the agent/employee and then have the GA level override pay directly to the agency. There are requirements to be set up at a GA level however.
Some companies will only use their own contracting link. If that is the case we will have them send you links to be contracted via email.
All MAPD plans and stand-alone part D PDP Rx plans require annual certifications. The certifications for most carriers are accessed through set websites. Some carriers such as UHC will send you a link to do your certification once your contracting is completed. To access a list of where to go for each companies certification go to pfsinsurance.com Click on the “compliance” tab and then click on the “certifications”tab. You will need a username and password to access this area. Call our office at 203-796-5403 to get yours.
AHIP is a designation that must be taken on an annual basis in order to sell MAPD and PDP plans. This is required in addition to the company certifications. You can get the lowest price by taking AHIP through a carrier such as UHC, HUMANA, ANTHEM OR AETNA The cost will be $125 through a carrier. If you are new to Medicare and need to take AHIP after July, it would be best to wait for the new AHIP to come out in July. It will count for the following year and the remainder of the current year.
United Healthcare is one of the few companies that does not require you to take an AHIP course every year.
Medicare supplements do not require annual certifications or AHIP to write them. The only exception is the UHC AARP Medicare supplements which do require certification through the UHC certification portal.
NOTE: Once your contracting and certifications are done, you can order sales supplies from the carriers you are appointed with. Call Pinnacle financial at 1-800-772-6881. They can put in your orders for you.
7. Marketing and generating sales opportunities
There are many obvious ways to market for Medicare and some not so common methods. Here is a quick summary of them all.
Brokers in the health business.
- This is an easy way to generate new clients. If you have an existing or are growing a health insurance block of business you have a great lead source for Medicare. On individual cases, make sure to put a note in your calendar to contact all existing clients and their spouses 4 months prior to them turning 65. Anytime you have a client or spouse turning 65 in the next few years put a notice in to call them. You should call 4 months prior to the month they turn 65. Because, once they are within 3 months, they will get bombarded with mail and calls. In Medicare you can submit an application 3 months prior to the month you turn 65. This is why it makes sense to get in the door early.
Group health insurance.
- If you are the broker on groups health plans, you should also be the person that works with anyone coming off the plan due to retirement or those that are still working at age 65 and older but choose to come off the plan.
- You can buy mail response leads for about $16.00 each. They are cards that a prospect fills out and sends back to you. Mail responders are exclusive to you but they are not a layout. It takes hard work and dedication to get in front of a mail reply card lead.
- Medicare business refers better than just about any other type of insurance product. Many agents maximize the amount of referrals they get by giving out referral gifts. Make sure to follow the Medicare rules when it comes to gifts however.
- It takes a great deal of preparation and work to make online leads profitable. Having said that, some of the most productive Medicare agents in the country exclusively use online leads. Click here for more details about how to work online leads
- seminars can be a great way to generate Medicare sales. Some of the larger carriers will cover the cost of your seminars. You will need to build a relationship with you local broker manager in order to be set up. Once you do, you can run seminars for UHC and they will pay for the advertising, send out invites and coordinate all attendees for you.
8. Medicare Sales Contracting Guide: Sales Presentation (face to face)
9 Online quote engine (provided at no cost to you)
All agents contracted with our agency have access to the online quoting tool at no cost. On the quoting tool you will be able to compare MAPD, Medicare Supplement and Part D plans with a number of companies. You can also quote term and UL life insurance, final expense and long term care. You will need a username and password to access the site. Call our office at 203-796-5403 to get your username and password.
10. Free Medicare lead program and types of leads
We offer a free Medicare lead program with absolutely no reduction in your compensation. Any agent or agency that works with our agency (You must have us as your upline on your Medicare plans you sell) is eligible for our lead program. You receive full compensation directly from each carrier. There are no productions minimums to participate. Our program works with any program that you choose to generate Medicare sales. This includes, mail leads, seminars, billboards, print ads, etc. Simply send us your receipts every month and we will reimburse 100% of your costs up to $500 a month. There is no catch.
11. Maintaining and growing your book
When agents build a Medicare book of business, it is important to keep some things in mind when it comes to retaining clients. First, you need to have a strategy to reach out to all of your clients during OEP. If you do not, there is a good chance you will lose a number of them to another carrier or agent. Medicare is all about the renewals (They pay 50% of the first year comp) and it is important to keep the attrition low in your book as a result. Have a good mix of Medicare supplement and advantage plans.
While advantage plans may be an easy sale at times, they also are require more work to keep them on the books. Advantage plans are subject to rate and benefit changes every year. As a result, you need to make sure you reach out to all of your Advantage clients prior to the OEP.
Medicare supplements are much easier to retain.
Most Medicare Supplement clients will simply stay on the supplement for years. You can collect the renewal for years as a result. Try to use companies that have a good track record of reasonable premium increases every year. A company with low rate increase will make it easy to retain your supplement book of business
Medicare Supplement, Part D and Medicare Advantage plans all auto renewal from a year to year basis. You may have a MAPD or Part D rx plan that is discontinued but other than that they auto renew without any action needed.
12. What is a General Agent (GA) and do you want to be one?
A general agent contract (GA) is a contract that pays a commission amount in addition to the standard street level commission. As an example, if street comp is $480 for a sale, a standard GA comp would be $530. Agents also receive additional compensation with plan renewals every year.
With a General agent contract, the producing general agent (if there is a producing general agent) will receive the street level comp and the override compensation on his or her own business. The other employees/agents who write business in the agency can either have all of their street comp and the override paid to the agency (That is a commission assignment) or they can receive the street level comp direct from the carrier and the override will be paid to the agency direct from the carrier.
There are requirements in order to be given a GA level contract.
The requirements vary from carrier to carrier. Most require the agency have at least 3 contracted, certified and producing sub agents in order to receive a GA contract. Some carriers require as many as 5 agents. Call our office at 203-796-5403 to inquire about the GA requirements for the carriers you want to write.
If you are going to contract as an agency, there are a few things to know. The first thing to know is, any agency that is contracted needs to have an insurance license. There must also be an agency principal and that person must be licensed as well. IMPORTANT: The principal of the agency must be licensed AND certified in order for the agency to receive commission payments on Medicare Advantage and Medicare part D plans. If the agency principal is not willing to do the certifications, list someone else who is willing to do the certs as the principal on the contracting.
It takes some work to get contracted, certified and familiar with Medicare sales. There are even more steps for an agency. However, Once it is set up, there is ample opportunity to write cases and build up a large renewal income. If you have any questions, call our office at 203-796-5403. We would be happy to speak about Medicare sales in detail with you.