Paul Sanchez
Commissions for selling Medicare insurance can be lucrative, with agents earning varying amounts depending on the carrier and their contract. The Centers for Medicare and Medicaid Services (CMS) set the maximum broker commissions for Medicare Advantage and Medicare Part D annually, but insurance carriers are not required to pay these amounts. Commissions for Medicare Advantage are on the rise, with the national commission for an initial plan sale in 2022 at $573, while renewal commissions increased by 6% to $358. Commissions for Medicare Supplement plans, also known as Medigap, vary and are based on a percentage of the plan premium, with the average commission rate at 22%. Agents who work with a Field Marketing Organization (FMO) can receive additional support and resources, and may even earn more sales and income.
| Characteristics | Values |
|---|---|
| Who sets the commissions? | The Centers for Medicare and Medicaid Services (CMS) sets the maximum commissions for Medicare Advantage and Medicare Part D annually. |
| Who receives the commissions? | Agents or brokers receive the commissions directly from the insurance carrier. |
| How is commission calculated? | Commissions are calculated as a percentage of the premiums of the policies sold. |
| How often are commissions paid? | Commissions are paid yearly when a client stays enrolled in their initial plan or switches to a similar plan type. |
| How much can commissions vary? | Commissions can vary depending on the state and region, with some states having higher maximums due to the cost of living and other conditions. |
| Can agents work with an FMO? | Yes, agents can work with a Field Marketing Organization (FMO) that provides additional marketing and administrative support. |
| How lucrative is selling Medicare? | Selling Medicare can be very lucrative, with the potential for high commissions and multiple pathways for income and success. |
| Are there any risks or conflicts of interest? | Yes, differing commission rates may create a conflict of interest between the agent's financial incentives and the beneficiary's best interests. |
| Are there any changes to commissions in 2025? | Yes, there were expected to be standardized commissions and a cap on agent/broker non-salary compensation in 2025, but these changes are currently on hold due to lawsuits. |
| Specific commission figures | For 2022, the national commission for an initial Medicare Advantage plan sale was $573, with renewal commissions of $358. For standalone Part D plans, the 2022 maximum national commission was $87 for initial enrollment and $44 for renewal. |
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What You'll Learn
Medicare Advantage and Medicare Part D commissions
Commissions for selling Medicare Advantage and Medicare Part D plans are set annually by the Centers for Medicare and Medicaid Services (CMS). These commissions are tied to the enrollment and retention of beneficiaries and are paid by insurers. Agents or brokers licensed to sell Medicare Advantage and Part D plans can help beneficiaries choose the right coverage, but their financial incentives may also influence which plans they highlight.
The maximum commissions for Medicare Advantage and Part D are set by the CMS and are commensurate with the fair market value (FMV). Within the maximums set by CMS, insurers determine the exact compensation level they will pay agents, which can vary by product or contract. For example, for 2022, the CMS set the maximum national commission for first-time enrollment in Medicare Advantage at $573 per beneficiary for most parts of the country. In California, the maximum first-time commission was $715. For standalone Part D plans, the 2022 maximum national commission for first-time enrollment was $87 and did not vary by region.
It is important to note that CMS guidelines for administrative payments state that these payments must not exceed the FMV or an amount paid to a third party for similar services in the previous two years. These payments provide financial support between insurers, agencies, and agents. The recent Medicare commissions court cases and changes have created some uncertainty about the commission structure. However, as long as the court-ordered stay is in place, the current commission structure is expected to be maintained.
The 2025 Medicare Advantage commissions are broken out by state/region. For Connecticut, Pennsylvania, and Washington D.C., initial Medicare Advantage commissions will increase from $689/member/year to $705/member/year. For California and New Jersey, the 2025 initial Medicare Advantage commissions will increase from $762/member/year to $780/member/year. In Puerto Rico and the U.S. Virgin Islands, initial MA commissions increased from $418/member/year to $428/member/year. In all other states, initial MA commissions increased from $611/member/year to $626/member/year.
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Medicare Supplement commissions
Medicare Supplement insurance, also known as Medigap, is offered by private insurance carriers to fill in coverage gaps in Original Medicare. It reduces or eliminates most Medicare co-pays and deductibles.
The varying commission rates across carriers and contracts can create a conflict of interest, where agents must choose between their earning potential and helping beneficiaries choose the coverage that best meets their needs. This has led to discussions about increasing transparency and reporting on carriers' actual compensation payments.
Selling Medicare Supplement insurance can be lucrative, offering multiple pathways for income and success. Agents who work with a Field Marketing Organization (FMO) can receive additional support and resources, which may help increase sales and, consequently, commissions.
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Administrative payments
The Centers for Medicare and Medicaid Services (CMS) establishes yearly maximum broker commissions for Medicare Advantage and Medicare Part D, but insurance companies are not compelled to pay these amounts. The amount you receive from Medicare Advantage and Part D sales may depend less on the carrier and your contract with them. Agents get a share of the premiums of the insurance they sell while selling Medicare Supplements.
CMS does not specify a maximum broker commission for Medicare Supplements, unlike Medicare Advantage and Part D. These commissions differ from one carrier to the next and from one contract to the next. As a result, there may be a big difference in payment amounts from one carrier to another. For example, for 2022, CMS set the maximum national commission for first-time enrollment in Medicare Advantage at $573 per beneficiary for most parts of the country. In California, the maximum first-time commission was $715.
CMS's Medicare marketing guidelines establish that these payments "must not exceed FMV or an amount that is commensurate with the amounts paid to a third party for similar services during each of the previous two years." This ensures that the payments are commensurate with fair market value (FMV).
Medicare Advantage commissions tend to increase every year. For instance, between 2017 and 2023, the new-to-Medicare commission increased from $443 to $601, and the renewal commission increased from $222 to $301.
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Commissions for independent agents
Medicare Advantage (MA) and Medicare Part D (PDP):
The Centers for Medicare and Medicaid Services (CMS) set the maximum broker commissions for Medicare Advantage and Medicare Part D plans annually. The maximum commission amounts are typically commensurate with the fair market value (FMV). For example, the national commission for an initial Medicare Advantage plan sale in 2022 was $573, while the renewal commission was $358. Commissions for Medicare Part D plans in 2022 were capped at $87 for initial enrolment and $44 for each renewal year. It's important to note that insurance carriers are not required to pay the maximum amounts set by CMS, and the exact compensation may vary depending on the carrier and the contract.
Medicare Supplement Plans:
Unlike Medicare Advantage and Part D, CMS does not set a maximum broker commission for Medicare Supplement plans. These plans are also known as Medigap plans and are used in conjunction with Original Medicare to fill coverage gaps. Commissions for Medicare Supplement plans vary and are typically based on a percentage of the plan premium. The average Medicare Supplement commission rate is around 22% with a 12-month advance.
Working with an FMO:
Independent agents may choose to work with a Field Marketing Organization (FMO) that provides additional support and resources. When working with an FMO, agents may receive commissions directly from the carrier or may be asked to assign their commissions to the FMO. Working with an FMO can provide access to more tools and support, potentially increasing sales and income.
Overall, selling Medicare plans as an independent agent can be lucrative, offering multiple pathways for income and success. Commissions may vary based on the specific circumstances, and it is important for agents to carefully consider their contracts and the applicable regulations.
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Commissions for agents working with an FMO
Field Marketing Organizations (FMOs) are top-level organizations licensed to sell health insurance products in most, if not all, states. They provide independent agents with the resources, products, and services that insurance agents need to sell insurance and be successful. FMOs help insurance agents get contracted with carriers to sell plans and provide assistance along the way.
When it comes to commissions, carriers pay agents for the business they write, even if those commissions go through an FMO first. Agents who work with an FMO frequently receive commissions straight from the carrier. In some cases, an FMO may request that agents "assign" their commissions to them, for example, if they provide the independent agent with leads, advances, etc. Importantly, FMOs do not take a cut of agents' commissions, meaning that the agent will receive their full commission on the plans that they sell. In fact, it is believed that working with an FMO may even increase agents' earning potential.
When selling Medicare, agents can earn two types of commissions: a flat dollar amount per application (Medicare Advantage and prescription drug plans) or a percentage of the premium sold (Medicare Supplements). The maximum commissions for Medicare Advantage and Medicare Part D are set annually by the Centers for Medicare and Medicaid Services (CMS) but are not mandatory for insurance carriers to follow. Commissions for Medicare Supplements, on the other hand, are not capped by CMS and can vary significantly between carriers.
While commissions are an important aspect of an agent's career, the relationship with an FMO should extend beyond just commission structures. A good FMO will provide support, guidance, and resources to help agents navigate the complexities of the market and grow their business. This includes providing up-to-date information on market trends, facilitating access to new product lines, and offering tools to streamline the enrollment process.
Overall, working with an FMO can offer numerous benefits to independent Medicare agents, including access to specialized products, contracts, and career advancement opportunities.
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Frequently asked questions
The national commission for an initial Medicare Advantage plan sale in 2022 is $573, while renewal commissions increased by 6% to $358 for 2022. Commissions may vary from carrier to carrier and plan to plan.
Commissions for Medicare Supplement plans vary and are based on a percentage of the plan premium, rather than a flat rate. The average Medicare Supplement commission rate is 22% with a 12-month advance.
Commissions for Medicare Part D plans in 2022 are capped at $87 for initial plan enrollment and $44 for each renewal year.
Yes, commissions may differ depending on the state and region you are selling in. For example, the maximum first-time commission for Medicare Advantage in California is $715, compared to $573 in most other parts of the country.
Agent compensation is tied to the enrollment and retention of beneficiaries. Within the maximums set by the CMS, insurers determine the exact compensation level they will pay agents, which can vary by product or contract.
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