I'm finally transitioning from a LOA to an independent broker for 2019 and I'm trying to figure out what to do regarding advances vs. "as earned" commissions. First of all I want to understand the math correctly. Reading thru the contracts it seems like advances are treated as a loan with a particular interest rate. Let's give it some numbers: if I sell a medsupp for $100/mo. at a 20% commission, that would be $20/mo. as earned, or $240 for the year. If that carrier advanced for 12 months at a rate of 1% per month, how much would I get? Do I use the present value formula to calculate it? If I plug =PV(1%,12,-20) into Excel it gives me $225.10. Next, how is the loan paid back? Is the advance on a policy's commissions paid back only by commissions due on that policy, or do renewal commissions go toward paying down any loan balance? I'm not sure how to ask this clearly. Let's say using the numbers above, I write one medsupp each month for a year. After 12 months, the first policy's advance is paid off, with the other 11 still outstanding. In month 13, do I keep the $20 renewal from the first policy, or does it go toward paying down my balance? It seems like GPM and the Omaha companies are 0% for up to 12 months. I would imagine most of the rest of the medsupp companies will charge something. I would also imagine PDPs and MAPDs pay FYC around the effective date, but maybe some pay monthly commissions instead. I'm just not sure since my agency controlled my commission cash flow up to this point. Just trying to figure out my marketing budget for the year so any input is appreciated.

From what I can recall off top of my head... The carrier will pay you whatever the advance is - 6 months, 9 months, year etc. The following month they will charge you 1% of the advance or in your $20 monthly commission example - that's $2.40 per month. Any new business that you get paid on will be paid in full MINUS whatever debit balance you've accrued from the advance costs...but I don't believe that you can payoff early - you can only pay that $2.40 each month. MAPD and PDP pay a flat rate that depends on your state and depends on whether they are first timers into Medicare. Generally, these area paid out within a couple of weeks but are subject to "CMS True-ups" which is when the carrier gets final notice from CMS as to whether or not the member is new to Medicare (higher commission). For planning purposes, you should also be aware that most AEP (MAPD and PDP) business doesn't get paid until January or even later of the new year. PS by new to Medicare, I'm really talking about whether they are new to MAPD or PDP

I’ve never paid any interest for my advances. But if a company I wrote charged interest, I would easily go as earned.

I’m newer to working with Humana as an independent agent. I wrote a bunch of new MA-PD policies for 2019. Humana is paying me $241 per policy in January. I’m assuming I get the balance of the FYC later in the year? If so, when does that typically get paid?