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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.

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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.

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Medicare commissions 2024

If you are a Medicare agent or thinking about going into the Medicare business, you should be aware of the Medicare commissions 2024.  We are happy to announce that CMS has released the maximum broker commission amounts for 2024.

It is important to note; insurance providers do not have to offer the maximum commission amounts.  It is just a guideline decided by CMS each year, what each insurance provider pays out is up to them.

The good news is; the amounts have gone up for the 9th consecutive year!

Maximum commissions for Medicare advantage plans 2024:

It is important to note: all commission rates are not the same.  They vary by state they are available in.

In the sates of both CA and NJ, the initial commission rates have increased from $750 per member for the year to $762 per member for the year.  This is an increase of 1.6% YOY.  The renewal commissions for CA and NJ have gone up from $375 per member for the year to $381 per member for the year.  This also adds up to an increase of 1.6%.

The states of CT, DC and PA have had an increase in initial MA commissions from $678 per member for the first year to $689 per member for the first year. This adds up to an increase of 1.62% YOY.  Renewal commissions for CT, DC and PA have increased 1.77%. Renewal commissions will go up from $339 per member per year to $345 per member per year.

Both Puerto Rico and the U.S. Virgin Islands initial MA commissions have gone up from $411 per member for the year to $418 per member for the year, this amounts to an increase of 1.7% YOY.  The renewal commissions have increased from $206 a member for the year to $209 per member for the year, this is equivalent to an increase of 1.46%.

In all other states not listed above, the initial MA commission amounts have increased 1.66% YOY from $601 per member for the year up to $611 per member for the year. Renewal commissions have also increased at a rate of 1.66% from $301 per member for the year to $306 per member for the year.

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Maximum commissions for PDP plans 2024:

The commission rates for PDP plans are the same in all states.

Initial commission rates for PDP plans have gone up by 8.7% YOY.  This means commissions have gone from $92 per member for the year to $100 per member for the year.  Commissions for PDP plan renewals have also been increased by 8.7% YOY. Commissions have ow gone from $46 per member each year to $50 per member each year.

Click here to see CMS carrier commission chart for 2024

Take a look below to see the 2023 & 2024 commission rates side by side.

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Maximum Medicare Advantage Commissions 2024

Being a Medicare Advantage insurance broker can be a rewarding and lucrative career. Rewarding because a broker is able to help their clients access the healthcare that is right for them and their families, thus helping to increase their quality of life, and lucrative because there are commissions for doing so. Commissions are always paid on top of salary, as they are in return for services rendered or products sold. In the case of Medicare Advantage, the insurance carriers are the source of the commissions. The Center for Medicare and Medicaid Services (CMS) sets the maximums for commissions each year, and released the following information for the coming insurance year, 2024.

CMS has increased their maximum commissions for the ninth year in a row for Medicare Advantage plans and Medicare Part D plans, also known as prescription drug plans or rx plans. It is important to remember that insurance carriers are not required to pay the maximum commissions to their brokers, but will release their commissions rates individually.

For Medicare Part D, the maximum broker commissions increased from $92 per member per year to $100 per member per year. This is an 8.7% increase from the previous maximum.

For Medicare Advantage, the maximum broker commissions are broken down by state, because they consider cost of living in that region.

Other States

In California and New Jersey, initial Medicare Advantage maximum commissions increased from $750/member/year to $762/member/year. For renewals, the commissions increased from $375/member/year to $381/member/year.

In Connecticut, Pennsylvania, and DC, initial Medicare Advantage maximum commissions increased from $678/member/year to $689/member/year. Renewals in these states increased from $339/member/year to $345/member/year.

In all other states, initial Medicare Advantage commissions increased from $601 to $611/member/year.   Additionally, renewal commissions went up from $301 to $306/member/year.

The territories of Puerto Rico and the U.S. Virgin Islands have their own rates, which increased for initial enrollments from $411 to $418/member/year. Their renewal commissions also increased, from $206 to $209/member/year.

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Medicare Advantage Commissions 2024

Medicare Advantage commissions 2024 are now official.   CMS releases the max allowable commission for MA and PDP plans every year.   Carriers can pay agent level commissions up to the max listed amount.  While this is the amount they can pay it does not necessarily mean they will pay the max.  Traditionally most do pay at the max however.   A number of carriers have been increasing the renewals to the max for new renewals and in many cases for renewals on existing business.

There are 4 different commission groups:

The Medicare Advantage and PDP commission are broken up into different state categories.  They are staying the same for 2024.  Categories are (PA, CT and DC), (CA and NJ), (Puerto Rico and US Virgin Islands) and the (national rate).  The national rate is all the other states not in the previous categories.   PDP commissions are the same for all states.

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Medicare Advantage and Part D referral fee for 2024

The max allowable referral fee for MA and PDP plan sales is remaining the same. ($100 MAPD and $25 PDP) This represents how much agents can provide to other agents for a referral fee.  It should not be confused with the amount that can be given to to other Medicare beneficiaries which is $15 for a referral.

Here is the official CMS commission document

Medicare Advantage Commissions 2024

2024 max allowable compensation and historical amounts.

How are commissions paid?

How much an agent receives for a MA or PDP sales depends on a number of factors.  What type of sale is a full commission on a 12 month advance?  When is commission a renewal only payment?  Will you receive a pro-rated commission?  We have a video explaining all the factors agents need to understand.

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Crowe and Associates programs for Medicare agents

Crowe and Associates has a number of programs for insurance agents including a T-65 Medicare seminar program, Free Medicare lead program and a number of others.

How Do Medicare Commissions Work?

What attracts many agents to Medicare sales is often two-fold. One, they enjoy helping people.  And want to work with Medicare beneficiaries to assist them finding the coverage that is right for them and their family. Two, the commissions that can be earned through Medicare insurance sales.

Agents are paid commissions when they sell a Medicare insurance policy to a beneficiary, and often a smaller commission again if that beneficiary re-enrolls next year. Agents are paid directly from the insurance carriers, meaning that, although they are independent and often broker a wide variety of companies and policies, they are being paid for selling a company’s product. This is one of the reasons why transparency is so important for building trust with beneficiaries.

How Much Can I Make?

One of the most common questions asked by new agents is, “how much can I make on commissions?” And the answer is: that depends! Their compensation for Medicare Advantage, Medicare Part D (prescription drug coverage), and Medigap or Supplemental insurance is directly tied to the amount of enrollments and client retention they achieve. The Centers for Medicare and Medicaid Services (CMS) sets the maximum commissions annually. Within those maximum amounts set by CMS, insurers determine what they will pay agents for commissions, which can be different based on which product or contract they are selling.

CMS sets the maximums on a national scale, but they can also differ based on cost-of-living locally and other factors. For example, in 2022, CMS set the national maximum for a first time enrollment as $573 per beneficiary. But in California, where cost of living is significantly higher than in most other parts of the country, the maximum first time commission was $715 per beneficiary. For stand-alone prescription drug coverage plans, or Part D plans, the commission does not vary. The first time enrollment commission is $87 regardless of location.

For renewals, CMS does set their values for commission lower than for first-time enrollment. The same for what are known as switches, which is when beneficiaries choose different plans within the same insurance carrier. For Medigap, or Medicare Supplement plans, the commission amounts are not set by CMS. Rather, they are a percentage of the annual premium of the plan. Often, that percentage is close to 20% of the annual premium of the plan.

While commissions are not the only motivation for an ethical agent, they can certainly help increase an agent’s income with hard work.

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