What Determines the Fair Market Value of Our Commissions?

[wehotex]

It's funny how our commissions are being reduced from $213 to $204 for 2015. Even the SS COLA is 1.5%!! Our costs of doing business are going up, not down, except for the very recent drop in gasoline prices. Is the FMV tied into any particular formula or is just what the insurers TELL CMS what they want to pay us?

 

[yogooglethis]

It's funny how our commissions are being reduced from $213 to $204 for 2015. Even the SS COLA is 1.5%!! Our costs of doing business are going up, not down, except for the very recent drop in gasoline prices. Is the FMV tied into any particular formula or is just what the insurers TELL CMS what they want to pay us?

It's based on the free market and what the carriers/CMS think the lowest bid agents will accept to sling MA policies .As MA becomes more the norm for the medicare population the carriers know that the selling of the MA concept isn't needed as much as it was when MA was first introduced.

Also with all the MA marketing restrictions and the change in commission advancements favoring the veteran MA agents who have a decent book of business with lifetime renewals- agents like me who they know are not going to walk away from it just because they chip away a little each year on what they pay us for new business.And at the same time it discourages the fly by night agents from entering the business which is fine by me.

 

[djs]

Bottom line: Its not in any way tied to the effort required to market and write business.

It is more tied to how much the government wants to subsidize MA plans, which is a decreasing amount, which squeezes the carriers who in turn, squeeze the doctors, insureds and agents.

Dan

 

[axeman462]

its based on what a bunch of bureaucrats, who sit in smoke filled rooms, and that are completely out of touch with the real world, thinks you are worth.

 

[wehotex]

its based on what a bunch of bureaucrats, who sit in smoke filled rooms, and that are completely out of touch with the real world, thinks you are worth.

I just phoned my Humana upline to clarify what there doing. She informed me that they will NOT go back to readjust Humanas lowball rates from years past. In fact, they will LOWER the 2014 renewal commissions because they exceed the FMV by $9! So those $213 renewals will be shot down to $204. What a bunch of crap!

 

[yogooglethis]

Bottom line: Its not in any way tied to the effort required to market and write business.

It is more tied to how much the government wants to subsidize MA plans, which is a decreasing amount, which squeezes the carriers who in turn, squeeze the doctors, insureds and agents.

Dan

Even though CMS makes the rules the bottom line is the carriers are beholden to shareholders first.If paying agents less seriously effected enrollment projections that analyst use to determine how much HUM,UHC AET 401k stock fund managers buy then you can believe commissions would be increased or the big carriers would exit the market which CMS wouldn't let happen because it would fark the MA program all up.These financial analyst are also well of the political forces that can effect companies like these that receive a significant portion of their revenues from public sector contracts so they are in tune with the agenda of the Medicare Trustees. If they want MA enrollment to continue to grow and they determine that commissions cuts to agents will not effect their enrollment projections then of course they will continue the cost cutting trend but if they thought their enrollment projections where derailed because they chased away too many field agents then things would be adjusted.

My point about the effort it takes to sell MA is that in 2015 with 30% MA penetration I doesn't seem to me anymore that half the battle in the MA sales process is selling the concept of MA vs the original FFS medicare model like it did in 2006 when MA penetration was less then 10% .Too me it is a much easier process now and that weighs in too what I will accept as compensation



So yes on one level you can say agents commissions are being reduced because the carriers are being squeezed by CMS but the bigger picture is that the invisible hand of the market always finds equilibrium and as long as CMS and the carriers get what they want they will probably continue to ratchet down commissions until it effect their projections/margin - and they they won't.

 

[wehotex]

Our piddly $204 is a SMALL part of the overall amount that it takes to acquire new business. I've ALWAYS heard that. It's our purpose to find, educate and retain the business. What about all of the others (SGAs, MGAs, FMOs). Are they ALSO being asked to sacrifice or take less than what they've been getting? I just spent an AEP switching a lot of my existing Mbs into more affordable MA plans (about 125 total). None of these uplines did a dammed thing for the business that I switched aroumd. If I haVE another crappy AEP like this last one with so many changes, I'll have to wonder if I should continue doing MA or just let the BOB decrease by attrition and really focus on doing something else. I serve a really needy clientele that needs year round service and some of these people really depend on me. Part of me hates the thought of leaving it, but another part of me wants to be fairly compensated for the effort and expense that I put in to the work.

 

[sman]

Our piddly $204 is a SMALL part of the overall amount that it takes to acquire new business. I've ALWAYS heard that. It's our purpose to find, educate and retain the business. What about all of the others (SGAs, MGAs, FMOs). Are they ALSO being asked to sacrifice or take less than what they've been getting? I just spent an AEP switching a lot of my existing Mbs into more affordable MA plans (about 125 total). None of these uplines did a dammed thing for the business that I switched aroumd. If I haVE another crappy AEP like this last one with so many changes, I'll have to wonder if I should continue doing MA or just let the BOB decrease by attrition and really focus on doing something else. I serve a really needy clientele that needs year round service and some of these people really depend on me. Part of me hates the thought of leaving it, but another part of me wants to be fairly compensated for the effort and expense that I put in to the work.

What is it about your clientele that is so needy and requires year round service? My MA clients rarely need much assistance except during AEP. Sure there's the occasional question, but overall there's not much service needed throughout the year.

 

[cadylou]

Our piddly $204 is a SMALL part of the overall amount that it takes to acquire new business. I've ALWAYS heard that. It's our purpose to find, educate and retain the business. What about all of the others (SGAs, MGAs, FMOs). Are they ALSO being asked to sacrifice or take less than what they've been getting? I just spent an AEP switching a lot of my existing Mbs into more affordable MA plans (about 125 total). None of these uplines did a dammed thing for the business that I switched aroumd. If I haVE another crappy AEP like this last one with so many changes, I'll have to wonder if I should continue doing MA or just let the BOB decrease by attrition and really focus on doing something else. I serve a really needy clientele that needs year round service and some of these people really depend on me. Part of me hates the thought of leaving it, but another part of me wants to be fairly compensated for the effort and expense that I put in to the work.

how big is your MA client base that you can't answer questions during the year?

 

[MedicareAgent]

i'm still in awe that I can make a sale in 1/2 an hour and make $204.00.