If you’re considering selling Medicare, you likely want to know how much you can earn from it. We’re covering the basics, including how working with an FMO can affect your commissions, to give you a good idea!
With the continued upward march of Medicare Advantage enrollment, 2024 looks like another fantastic year for record sales, which is good news for agents looking to earn more commission! Let’s get right to the facts and figures.
How Much Does an Insurance Agent Make on Medicare Sales?
Generally speaking, agents earn two types of commissions selling Medicare plans: a flat dollar amount per application (Medicare Advantage and prescription drug plans) or a percentage of the premium sold (Medicare Supplements).
Medicare Advantage and Part D Commissions
Agents selling Medicare Advantage and Part D plans get a flat dollar amount of money per application. This comes to them in the form of initial commissions and renewal commissions. Carriers pay out initial commissions when an agent makes a new sale or when the beneficiary enrolls in a new, “unlike” plan (different type). Each year and beyond, carriers pay out renewal commissions to the agent if the beneficiary remains enrolled in the plan or enrolls in a new, “like” plan (same type).
For 2024, the national maximum broker compensation for MA sales is $611 for initial sales and $306 for renewals. The 2024 PDP national maximum broker compensation is $100 for initial sales and $50 for renewals.
Keep in mind that, if you’re selling a Medicare MSA plan, you could have the benefit of getting commissions for both plan types, MA and PDP! (Medicare MSAs don’t include prescription drug coverage, so you can sell a PDP with those MA plans.)
The Centers for Medicare & Medicaid Services (CMS) set the maximum broker commissions for Medicare Advantage and Medicare Part D annually; however, insurance carriers aren’t required to pay these amounts. What you earn for Medicare Advantage and PDP sales could be less, depending on the carrier and your contract with them.
Medicare Supplement Commissions
When selling Medicare Supplements, agents earn a percentage of the premiums of the policies they sell. Unlike with Medicare Advantage and Part D, CMS does not set a maximum broker commission for Medicare Supplements. These commissions also vary from carrier to carrier and contract to contract.
Potential Medicare Commissions Calculator
Our expert staff has developed Potential Medicare Commissions Calculators for 2024 maximum broker MAPD and PDP, Medicare MSA, and Medicare Supplement commissions for street level agents in all states except CT, PA, DC, CA, NJ, and PR. It also includes cross-selling potential earnings. If you haven’t sold Medicare products before, this a great way for you to see the immediate opportunity you’d have to offer Medicare plans to your current book of business! You can also calculate your potential MAPD residual commissions to get an idea of their lifetime value.
Want access to Ritter’s potential Medicare Commissions Calculators? Please email [email protected].
Note: Commissions, especially Medicare Supplement commissions, have a lot of variables, such as the carrier, plan, state, and other specifics of enrollment. This calculator is only to give agents an idea of their earning potential.
Commissions With an FMO vs. Without an FMO
Carriers pay agents for the business they write, even if those commissions go through an FMO first (scroll down to assigned vs. direct commissions). It’s important for agents to know that carriers pay agents and FMOs separately. Your relationship with an FMO is comparable to your clients’ relationship with you. You don’t pay anything to the FMO, just like your clients don’t pay anything to you. You earn your commissions from the carrier, just like the FMO earns their override from the carrier.
So, what you earn working with an FMO is no less than what you’d earn working without one. In fact, we think that you have the potential to earn more commissions with an FMO! There’s a lot of value in the training and back-office support that an FMO can provide agents with licensing, contracting, leads, marketing co-op, sales tools, submitting business, supplies, commission tracking software, etc. That additional support could lead you to make more sales. Additionally, many FMOs are usually able to offer agencies higher-than-street-level commissions!
Assigned vs. Direct Commissions
FMOs can offer two different types of contracts (depending on how they contracted with the carrier): direct and assignment of commissions. Oftentimes, an agent working with an FMO will receive commissions directly from the carrier. In select cases, an FMO may want agents to “assign” them their commissions (e.g., if they provide the agent with leads, advances, etc.). In others, the carrier may require agents to assign their commissions to their FMO (e.g., the carrier only pays direct contracts).
When you assign your commissions to the FMO, this means the carrier will pay the FMO, who will then pay you. Agents signing an Assignment of Commissions contract must be careful, because depending on their contract, their upline could keep their renewals should they choose to leave. If there’s a vesting schedule in the contract, that will affect how much of their renewals an agent keeps, should they choose to leave their upline.
Note: In cases where you must sign an Assignment of Commissions contract with Ritter, it is an immediate vested contract, meaning that any money you make is yours!
Most agents prefer direct contracts, however, some carriers don’t offer them. Smaller carriers, especially, utilize the assignment of commission setup, since they often don’t have the administrative infrastructure to support paying out commission to a lot of agents. Agents only able to obtain assignment of commission contracts should carefully review the vestment terms in the agreement.
Levels & Commissions
The type of product and contract aren’t the only factors that affect Medicare agents’ commissions. Regardless of whether the contract is direct or assignment of commission, a street-level agent will receive commission from the carrier (either directly from the carrier or paid through the FMO) at an agreed upon industry rate. If the agent moves up or down the level hierarchy, commission amounts will change.
If an agent signs on with an agency at a sub-street level, this means that their immediate upline will receive part of the agent’s commission (in exchange for services), so the agent will receive less than the standard industry amount. The higher the level of the agent, the more commission the agent receives.
At the bottom of the hierarchy is the LOA, who assigns all their commission to their immediate upline. How the upline pays the LOA for their work depends on the contract between the LOA and the upline. Perhaps they receive a percentage back of the commission. Perhaps they receive an hourly wage and benefits as a W-4 employee.
Looking for more info about how commissions work with agencies and FMOs? Download our free eBook, How Insurance FMOs Work, to read additional details on levels and commissions and multiple examples so you can better gauge what you could make!
Earn More with Shop & Enroll
We’d like to highlight one of the perks Ritter offers here, because we’re so confident it can help you earn more, we think it deserves discussion. Shop & Enroll is Ritter’s exclusive, CMS-compliant quoting and enrollment software that is free and easy to set up and use. Streamline your Medicare Advantage and Part D enrollment by collecting eScopes, comparing plans side by side, and sending FastTrack prefilled applications to clients. Instead of submitting applications through different online platforms, simplify your process and maximize your earnings with Shop & Enroll.
Turnkey Marketing Strategies
Besides making enrollment easier and smoother, Shop & Enroll can be a powerful marketing tool, generating more leads and thus more sales. When you get your own Shop & Enroll site, you’ll receive a personalized URL that you can disperse on printed marketing materials. For example, if your name was Susan Jones, your URL might look like ShopandEnroll.com/susanjones. Your Shop & Enroll page will be branded with your name and contact info. Not only do we give you a Shop & Enroll URL, but we can also print customized Shop & Enroll marketing materials for you, saving you time that you could use for more sales. Head over to ShopRitterIM and check it out!
Want to drive traffic to your site and stay in the forefront of your clients’ minds? Link to and share content from Ritter’s regularly updated Shop & Enroll blog through your website, emails, and social media platforms. When you follow the instructions on Ritter Docs, everything you share from the blog will be connected to your Shop & Enroll site.
Shop & Enroll also makes generating leads easy through affinity partnerships. Your partners will like the fact that Shop & Enroll is CMS-compliant and turnkey, meaning they don’t need to maintain any records or documentation on their end. All they need to do is let you display your Shop & Enroll materials for their clients to pick up.
Check out these detailed instructions on how to leverage Shop & Enroll in your community!
Note: To access the instructions linked in this section, you must be a registered agent with Ritter. Register for free today!
Save Time, Earn More
Overall, Shop & Enroll will make your life easier and your business run more smoothly. You could save time (and gas!) by running appointments remotely. You’ll save time sending prefilled applications and enrolling your Medicare Advantage and Part D clients through one platform. And, saving time means having time for more appointments. We all know where this is leading — more appointments means more sales!
Hesitant to try something new? Our Sales team is ready to answer your questions!
Ready to get your free Shop & Enroll site? Sign up today!
Selling Medicare can be very lucrative, if done right. Hopefully now you have a better idea of how much Medicare agents can make and know that working with an FMO should never hurt your commissions, only help them grow!
Looking to join or switch FMOs? Here’s a list of 10 things you should consider!
Editor’s Note: This article was originally published in October 2020. It has been updated to include information more relevant to the 2024 Annual Enrollment Period.