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Unfortunately, chargebacks are sometimes a part of Medicare sales. However if you follow the advice below, you can get some tips to help teach you how to avoid commission chargebacks.

What are chargebacks

When we refer to Medicare sales, an agent receives a chargeback if the client terminates the plan you enroll them in early. When this happens, a portion of an agent’s commission for the sale is lost.  This occurs if a client either cancels their plan or passes away.  When this happens, the agent must pay back a portion of any advanced commission payments they received.

In many instances agents choose to receive commission advances.  In other words, the carrier pays several months of commissions on the sale of a policy up front, before the client makes their premium payments.  Most agents like this because they do not have to wait to get the payment. Although, this can cause potential problems if the client cancels their policy. In that case, the agent incurs a debt to the insurance carrier.

Watch a YouTube video on how Medicare commissions pay

It is important to note: each insurance carrier has its own payment schedule and rule for chargebacks.

Don’t be surprised by chargebacks

Because most of us do not own a crystal ball; clients pass away or change their mind on their coverage choice, agents must prepare for a few chargebacks each year. It is helpful to set money aside to take care of any debt you may incur.

Pay your chargebacks

This is obvious.  If you have a bill, you need to pay it.  Agents who do not pay their debts may end up with a Vector hit against them.  Insurance companies use this service to report unpaid debts. This will damage the agent’s credit score and can affect their ability to offer products with some carriers.

In certain situations, there are carriers who will not contract brokers with a Vector hit until the debt is paid.

Agents can pay some chargebacks directly out of their commissions if the insurance company owes them enough money to pay it.  If there is not enough commission due to pay the debt, some carriers allow the agent to set up a payment plan to clear the debit.

AEP Enrollments

In some cases, enrollments that take place during AEP, are paid to agents in halves, The first half in January and the other half in February.

When the client either moves or drops their Medicare Advantage plan during the OEP, the agent receives a chargeback. That is a good reason to make sure that you are available to your clients and they do not seek another agent to answer their questions. Another agent could talk your client into a plan change during the MA OEP ending in a chargeback for you.

Find out about the 2025 Medicare commissions

Medicare Supplement chargebacks

Medicare Supplement chargebacks are much less common than MA chargebacks. In many cases, carriers pay Medicare Supplement commissions as earned.  This means when the client pays their monthly premium the agent receives their commission. Sometimes agents receive commission advances anywhere from 3-12 months ahead. Because many carriers charge a small fee for advances, most agents decide to receive payments as earned. However when agents receive a chargeback for these plans, it is nominal.

Stay in touch with your clients

It is extremely important for agents to stay in contact with their clients.  Agents who build a good relationship with their clients have a much lower chance of losing them to another agent. This ensures they will call you if they are considering a plan change.  It is always a good idea to check in and make sure clients are happy with their coverage so you can solve any issues that come up of change their plan if necessary.

Get some tips to maintain your book of business

Some times you can’t predict losing a client due to death or other unforeseen circumstances.  The best option is to make sure clients know you are available even when they are unhappy.  Remember to be ready for a few chargebacks.

Watch a few Medicare agent training videos on our YouTube channel

Medicare commissions are not as straight forward as we want them to be. Many agents are confused when they receive their commission deposits. That is why reading Medicare Commission Payments Explained may help unravel the mystery. It is important to note: commission payments require a certain amount of attention to detail.  

CMS and commissions

Each year the maximum allowable commissions for Medicare Advantage and PDP sales is set by CMS. The amounts vary by state and can usually be found online once they are available. Unfortunately, there are many different situations that determine how much of that commission an agent receives for each sale.

For the last several years, CMS has consistently raised the commission rates. The renewal amount differs from the amount agents receive for an initial enrollment. Renewal commission amounts also change annually and add up to half the amount of the initial enrollment commission rate. The rates are decided by state and each state is put into a group. The state groupings are (CA and NJ), (CT, PA and DC), (Puerto Rico and US Virgin Islands) and all the other states are in the “National” bucket.  The highest pay goes to CA and NJ, followed by CT,PA and DC, then the national bracket.  Puerto Rico and Virgin Islands pay the lowest amounts.

Watch a recorded webinar to learn more about commission payments CLICK HERE TO VIEW.

Initial payment, true up and pro-rata

In 2025, the max commission for an MAPD sale in CT is $705 with renewals at $353 for the year.  That sounds easy enough, but it is not that simple.  The amount of commission an agent receives depends on the situation.  We provide a breakdown below:

Medicare Advantage commission payments – new to Medicare 

If your client is new to Medicare, the carrier pays the full commission in two payments:  the intial payment, then the true up payment.  The two will total up to the full amount.  The renewal commission rate will be half of the full amount and pays over the course of 12 months starting in January. (Regardless of the effective date of the original sale).

New to Medicare Advantage but not new to Medicare 

If the client enrolls in a Medicare advantage plan for the first time, the commission is the same as a new to Medicare enrollment. The difference is how the carrier pays it out.  The commission is pro-rated.  In other words, the payment amount is based on the month the plan is effective.  So if someone is enrolled for a June 1 effective date, the agent receives 50% of the full commission. (They will be in the plan for 6 out of the 12 months.)  If the person is enrolled for a March 1 effective date, the agent receives 75% of the commission and so on. The renewal starts in January and the agent receives the full renewal amount.

Click here to find out what the 2025 commission rates are

Changing from one Medicare Advantage to another 

When your client changes from one MA/MAPD plan to another, the agent receives the same amount when they renew an MA/MAPD plan (half the new enrollment commission).  If you enrolled a PA client in an MAPD plan with a Jan 1 start date, the commission is $353. However, plan changes are also pro-rated and if you enroll a PA client in a plan with a March start date, you receive 75% of the $353. In other words, $264.75.

See what to do about non-commissionable PDP plans

Commission payments for AEP

The commission rules do not change during AEP although when agents receive their payment does.  Any clients agents enroll during AEP will not pay out until January. Insurance carriers are not permitted to pay them before then enrollment goes into effect. Therefore, most carriers pay out sometime during January.

Use the links below to learn more about our Medicare lead program and T-65 seminar program:

Medicare lead program

Medicare sales seminar program

Click here if you are ready to fill out an online contract and join the Crowe team