[FONT='Century Gothic','sans-serif']Yesterday, CMS released their new guidance for 2009 agent/broker commissions Starting on page 17, CMS outlines how companies will determine their 2009 commissions. In an attempt to simplify it, below is an example:
(This example is based on our understanding of CMS's conference call yesterday and multiple follow up calls with the major companies in this market. These numbers are an example only and will vary by market and plan type.)
ABC Company determines that the "market" agent commission for 2006 and 2007 was $350 per enrollment, plus renewals. They adjust the $350 first year commission by CMS's inflationary numbers (not yet known) and arrive at a $400 first year commission. Then they take 50% of $400 to determine a renewal payment of $200 per year for years two through six.
CMS will allow companies to determine commission by market and product type. This means that a PFFS plan in Iowa will have a different commission amount than an HMO in Florida.
CMS stated that 2009 will be considered year two for all enrollments and companies will be required to pay their renewal amount ($200 above) for each enrollment. On page 15 of the , CMS states they will run reports of all 2009 enrollments and communicate with the companies the enrollments that are considered "newly entitled or enrolled from original Medicare". Then companies will be allowed to pay out the additional 50% of commission. From the above example, the agent would receive two payments of $200. The first payment would be at the time of the enrollment and the second payment would come after CMS updates the companies with all "new enrollees".
CMS is requiring that companies post their 2009 commissions by November 15th. From our experience, companies will wait until the last minute to make a final announcement on their 2009 commission.
[/font]
(This example is based on our understanding of CMS's conference call yesterday and multiple follow up calls with the major companies in this market. These numbers are an example only and will vary by market and plan type.)
ABC Company determines that the "market" agent commission for 2006 and 2007 was $350 per enrollment, plus renewals. They adjust the $350 first year commission by CMS's inflationary numbers (not yet known) and arrive at a $400 first year commission. Then they take 50% of $400 to determine a renewal payment of $200 per year for years two through six.
CMS will allow companies to determine commission by market and product type. This means that a PFFS plan in Iowa will have a different commission amount than an HMO in Florida.
CMS stated that 2009 will be considered year two for all enrollments and companies will be required to pay their renewal amount ($200 above) for each enrollment. On page 15 of the , CMS states they will run reports of all 2009 enrollments and communicate with the companies the enrollments that are considered "newly entitled or enrolled from original Medicare". Then companies will be allowed to pay out the additional 50% of commission. From the above example, the agent would receive two payments of $200. The first payment would be at the time of the enrollment and the second payment would come after CMS updates the companies with all "new enrollees".
CMS is requiring that companies post their 2009 commissions by November 15th. From our experience, companies will wait until the last minute to make a final announcement on their 2009 commission.
[/font]
