CMS Changes Are Going to Lead to Commission Cuts for MAPD

Discussion in 'Senior Insurance Forum' started by Nikita, Dec 19, 2013.

  1. Nikita
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    Just heard tonight from my regional manager that due to some CMS changes, first year commissions for ALL advantage plans are going to be reduced. You will only get the entire first year commission if the plan is sold in January. After that commission will be pro-rated, i.e. a plan sold in July will receive only 6 months of first year commission and then starting Jan 1, the agent will receive monthly renewal rate (50% of first year commission)....So if you enroll someone with 12/1 effective date, you will receive 1 month of higher first year commission and then on 1/1 you will receive 50% of that rate (i.e. the renewal rate) for remaining commissions - so essentially losing almost one-half of first year commissions!
     
    Last edited: Dec 20, 2013
  2. G.Gordon
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    Some carriers already sort of do this, not a big deal. Why would you get full year comp on a plan sold in Sept.?
     
  3. sman
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    As Gordon said, some carriers are already doing this. Your subject line is misleading. Just because a carrier only pays you for the months a person is covered doesn't mean commissions are reduced.

    If you wrote a person in June for a July effective date who is aging in and the carrier paid you the full $425, what do you think would happen if that person then switched plans during AEP? The carrier would ask for half of the commission back. Instead of doing it that way, the carriers are going to pay you for the 6 months the person would be covered and then you won't have a charge back.

    It really isn't a big deal.
     
  4. Nikita
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    I don't think you understand what I am saying. With this change, you will NOT be paid for all the months that a person is covered during their first year of enrollment. If you enroll someone who is turning 65 in December, and their effective date is 12/1, you will only get 1/12 of the first year commission. So instead of getting $425, you will get 1/12 of that amount. YES I do think that is a big deal!!

    Secondly, you're assuming most people switch plans during AEP. My experience is that most people don't. So for the vast majority, this will not be the case. So if they stick with the plan they were enrolled in, why would you not expect to be paid a full 12 months of the higher first year commission before starting in with the reduced renewal amount beginning on their anniversary date?
     
    Last edited: Dec 20, 2013
  5. SecureHealth1
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    I think that new rule only applies to years 2-10 on renewals, not new to Medicare year 1?
     
  6. Nikita
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    According to what my manager told me tonight, and I HOPE she is wrong, but she said that it applies to first year commissions....
     
  7. kennethbroyles
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    Craig Ritter.... where are you? What are you hearing?
     
  8. wehotex
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    Says you. It's matter of maintaining a positive cash flow. If you sell an Oct eff, you'll only get $51.75 (17.25 x 3 mos). This sucks when you have bills to pay for some and even harder for newbies to succeed at it with not many renewals coming in to soften the blow. It's ALWAYS better to have the $$ now rather than later.
     
  9. G.Gordon
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    You are assuming that in your example of a December effective enrollment that it will start at the reduced rate. in January Over the course of the 1st 12 months of enrollment, if the person stays with the same plan, you end up with the same money, just not advanced. Coventry has done this, it works out to be the same money. Yep, if you're expecting the full comm at the end of the year it could be tight on a new person to the business.
     
  10. Nikita
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    GGordon, I don't understand your math or your last posting. The monthly commission rate for the first year is TWICE what the monthly rate is for the renewal. So, for example, with the person whose effective date is 12/1, the agent receives one month at the higher rate, and 11 months at 50% of that rate, and you're saying that it all works out the same? I didn't assume that starting January 1, the commission will be at the reduced rate, this is what my manager told me would be happening....that starting in January, all commissions are paid at the renewal rate unless it is a new enrollment for January.
     
    Last edited: Dec 20, 2013
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