CMS proposed rule 2024
Because there are many rules and proposals we will clarify, this post explains the CMS proposed rule 2024 (CMS-4205-p). This rule was proposed in early November 2023.
Some of the changes included in this proposal
Agent compensation adjustment
CMS is proposing putting a maximum allowable commission in place for all agents. This amount will be based on national level of $611 for new Medicare Advantage enrollments and $306 for renewals of Medicare Advantage plans.
In some states the proposed amount is lower than the commissions agents are currently earning. both CA and NJ, have current commission levels for new Medicare Advantage enrollments of $762. In CA and NJ the renewal commissions are $381 annually. The states of CT, PA & DC Medicare Advantage commissions rates for new enrollees is $689 and $345 for renewals. The wording on this part is a little tricky so we are not sure if the commission rate would all remain as it is or if it will all be one standard amount no matter which state you sell in.
Learn about Medicare commissions 2024
CMS has also proposed the addition of a $31 admin fee for each application. This may seem like a good thing, but it is not nearly enough to replace the overrides and other monies they propose to eliminate.
Overrides and Admin fees
If CMS passes the proposed rule as it is written, it will have a much bigger impact on uplines than it will on individual agents.
The proposal includes the elimination of all administration fees as well as overrides at all levels (GA, MGA, SGA, FMO & NMO). This means agencies at any level that have direct pay agents would lose all revenue eared through overrides. That part of the proposal would essentially end the direct pay agency model.
Click here to learn about pro-rated Medicare commissions
How this effects agents
Agents would lose access to all the services provided by their uplines. Some of what they stand to lose are:
- Assistance with contracting. Uplines make the contracting process much easier by providing a much more streamlined option to agents. Some carriers currently do not contract directly with agents at all.
- Connecture and Sunfire or any upline provided quoting and enrollment tools that their upline currently provides.
- Education and training. This is an important one. A good upline provides agents with many different training options that can include in-person, telephonic or training through teams or zoom calls. Just to mention a few. These trainings include updated CMS compliance information, carrier specific products or assistance with basic knowledge or sales practices.
- Back office support, the back office provides agents with a myriad of answers to their questions as well as training to use enrollment portals or help processing applications as well as various other assistance.
- Marketing reimbursements; these are a great help to agents, especially when they are trying to get up and running.
These are just a few examples of what an upline provides it’s downline agents. The list may vary depending on the upline you are currently working with.
Click here to see the programs that Crowe has to offer
More of what CMS proposes to eliminate
CMS wants to eliminate all marketing money. This includes marketing money from carriers weather it goes toward expenses or lead costs. Reimbursement of expenses will not be permitted at any level. This will effect; agents, agencies, FMOs and even NMOs.
They want to stop all payments agents receive for helping clients complete HRAs.
Take a look at a our YouTube video on this topic
Would any agency survive this
The proposal would not eliminate all agency models. If the agency is LOA, they may be able to survive if they offer agents a lower commission rate and operate on a much smaller budget. An agency that sells a large volume of ancillary products such as; cancer, critical illness, life or annuities, may also remain viable.
If the main revenue source of the agency/FMO comes from the sale products such as annuities, life P&C or other products and does not rely on Medicare sales, they could stay afloat. Any business that uses Medicare sales as a secondary income source may suffer a loss but could still remain profitable.
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When will this go into effect
Although the final draft of the proposal may be decided in January, the timeline of when we will know what it actually says may not be until the spring. CMS was receiving comments on the proposal until Jan 5, 2024. That window is now closed. NABIP(a huge advocate for agents/agencies) was also collecting a 5 question survey on this proposal in an effort to get our voices heard.
If the current version of the rule remains as is, it will create a substantial impact in the entire industry. It will effect everyone from NMOs to the clients.
To view the proposal in it’s entirety, go to www.regulations.gov
You can download the entire 486 page document . The pages that pertain to Medicare agents are 6, 236-248. There you will be able to view the specifics on the agent compensation changes.