Ritter Insurance Marketing, Craig Ritter

Clarification of CMS Broker Compensation Rules for Medicare Advantage

There are a couple of areas in CMS Marketing guidelines where there seems to be widespread confusion on what insurance companies are allowed to pay and REQUIRED to pay to brokers.

  1. Internally replacing an Existing Company product – If you bring a piece of business to a Medicare Advantage company which “Internally Replaces” an existing piece of their business (whether Medicare Supplement, Medicare Advantage or Employer Group), the insurance company is REQUIRED to pay broker compensation.  This is true whether or not you are the “broker of record” on the former piece of business.  This is true whether or not the former piece of business is a “house account”.
  2. Exception to Rapid Disenrollment Rule – If you write a piece of business during October, November or December and the member changes plans for January 1st of the following year, this IS NOT a rapid disenrollment because the member staying in the plan for the full plan year.  The chargeback should not be 100% of the advance, but only the unearned portion of the advance (9, 10 or 11 months, respectively).
  3. Replacement of “Like for Like” during Initial Year – If you do a “Like for Like” replacement during a Medicare Beneficiary’s “Initial Cycle Year”, you should receive INITIAL COMMISSIONS.  For example, if a Medicare Beneficiary “ages into” Medicare in April and enrolls into a Medicare Advantage plan (Company A) and you enroll them in different Medicare Advantage Plan in July (with Company A or with Company B, C, etc.), you should be paid the FULL INITIAL COMMISSION, even though you are replacing a Medicare Advantage plan.  The reason is that the Medicare Beneficiary is still in their Initial Cycle Year.  Whether it’s a Like for Like replacement or a Not Like for Like replacement doesn’t matter.  Initial Cycle year is paid Initial commission, period.  (This doesn’t happen frequently, however, the Medicare Beneficiary can switch using OEP-NEW or with an SEP like Low income subsidy or the SEP for an SPAP election or an SEP for a move out of the plan’s service area, etc.)

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