Pro-rated Medicare commissions
Pro-rated Medicare commissions are something that all agents who offer Medicare products need to understand. The Medicare carriers pay pro-rated commissions to make sure agents do not end up owing the carriers too many chargebacks for disenrollments. This also protects the carriers from the chore of trying to collect unearned money from brokers who may not have it to pay back. It is better for both parties.
Agents receive pro-rated Medicare commissions for enrolling individuals in either Medicare Advantage or Medicare prescription drug (Part D) plans. Once an agent submits an application for a beneficiary, the agent receives commission. The amount of commission is based on the number of months the enrollee remains active in that specific plan.
How pro-rated commissions work
Agents receive a partial commission payment for every month their client stays in the carrier’s plan. This payment system is considered more equitable than carriers paying out the full commission at once. As we stated earlier, this avoids chargebacks for any unearned commissions. Agents may be motivated to give clients ongoing support to ensure they do not switch plans on the advice of another broker. On the whole, agents who are available to clients, maintain their book of business.
The way to figure out the amount of a pro-rated commission, divide the total commission for each enrollee by the number of months the member is enrolled in the plan. Let’s say the total commission for an enrollee is $600 and they stay in the plan for 10 months; this means the agent receives $60 for each month.
Find out more about commission payments
How beneficiaries benefit from this payment structure
We cannot stress enough how important forming a good relationship with your clients is. The pro-rated commission structure provides an incentive for agents to make the extra effort. Having a vested interest in providing a greater standard of customer service, helps beneficiaries develop trust toward their agent. If the agent continuously provides good advice and follow up, the client in turn provides an important service to the agent. In most cases, happy clients tell their friends and family. This is great benefit to the agent who receives new client recommendations and an opportunity to grow their book.
Watch a YouTube video on Medicare commissions
To Sum it up
The pro-rated Medicare commission system provides is a clear and fair way for Medicare companies to pay agents. It helps incentivize a good agent/client relationship. It can ensure agents provide the best plan options to their clients, so they receive coverage options that align with their healthcare needs. This helps everyone avoid dis-enrollments.