Recently, insurance companies have been making Medicare Advantage and prescription drug plans non-commissionable. If this has you wondering “Can you charge a consulting fee for Medicare advice?” you’re not alone.
Nobody wants to work without payment. We understand. Still, insurance agents must be aware of federal and state laws and risks around insurance sales consulting fees.
Is Charging a Medicare Consultation Fee Legal?
We have been advising independent agents that there may be significant risk involved with charging beneficiaries a fee for assisting in the selection and enrollment into a MAPD or PDP plan. Here’s why:
- The Code of Federal Regulations (CFR) does not provide an exception for the non-commissioned products.
- Agents recommending a PDP plan are often selling a corresponding Medicare Supplement product. Med Supps are subject to the state insurance department’s oversight.
- If a complaint is filed against the agent, it could potentially put the agent’s insurance license at risk. For this reason and in our opinion, the potential risks outweigh the financial benefits in charging a beneficiary.
- The CFR is clear that agents/brokers selling MA and PDP products on behalf of insurance companies must be compensated by the carriers. This is often stated in the producer agreement and may be subject to for-cause termination if the contracted agent is charging the beneficiary a fee.
Our view is that agents cannot charge a Medicare Part D consultant fee or Medicare Advantage consultant fee.
NABIP’s position supports our view that agents cannot charge a Medicare Part D consult fee or Medicare Advantage consultant fee for assisting beneficiaries.
How Do Health Insurance Agents React to Zero Commissions?
What can insurance agents do when Medicare plans go non-commissionable?
Not all Medicare Advantage or prescription drug plans are becoming non-commissionable. You can still earn money by selling commissionable Medicare plans.
Offering ancillary insurance has always been a great way to fill in Medicare coverage gaps and earn commissions. Make sure you have these plans in your portfolio!
Some ancillary plans pair particularly well with Medicare products. We recommend pairing hospital indemnity and Medicare Advantage plans and final expense insurance and Medicare Supplements.
You can still earn money by selling commissionable insurance products.
You could also start selling Affordable Care Act insurance if you don’t already. We lay out why offering ACA insurance is beneficial for agents selling Medicare here.
The Value of Working in Your Clients’ Best Interest
As you’re navigating insurance companies reducing Medicare commissions, keep in mind your clients’ best interests.
No, helping a client enroll in a non-commissionable Medicare plan won’t earn you initial commissions — nor renewals. Yes, it will take time away from potentially commissionable sales. However, helping a client into the plan that benefits them the most will prove to them you’re (still) worth going to for assistance.
Remember, your unpaid work now could turn into paid work later. And your honesty, integrity, and work now can affect your future business.
Remember, your unpaid work now could turn into paid work later.
That client you helped enroll in a PDP not paying commissions this year? They could want help with their prescription drug coverage next year and switch to a commissionable PDP.
The client you just enrolled in a Medicare Advantage PPO plan not paying commissions? They could refer three of their Medicare eligible friends to you. Those individuals may enroll in commissionable Medicare Advantage plans or Medicare Supplements!
Ultimately, if you don’t treat a client right, another agent will; then you haven’t just lost a commission. You’ve lost a client, cross-selling opportunities, and a valuable marketing asset for your business.
Sometimes, helping clients enroll into non-commissionable insurance plans may be worth it for their loyalty and referrals.
We expect we’ll continue to see insurance carriers announcing non-commissionable Medicare plans. The Medicare market is going through a reset after legislative changes and higher-than-anticipated claims and coverage usage.
As this occurs, no, agents should not charge a fee for Medicare consultations. Yes, you should diversify your insurance portfolio and continue to work in your clients’ best interest.
Not affiliated with or endorsed by Medicare or any government agency.
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