Q. So, how much are you worth to a Medicare Advantage salesman?

From John Curry, December 29, 2008

A. As much as $600

Medicare Advantage Commissions

The Centers for Medicare and Medicaid Services (CMS) announced in a memo to health insurance companies that they have a plan to combat rapidly rising commissions paid out to insurance agents selling private Medicare Advantage plans. Some health insurance companies are paying as much as $600 to an agent for an enrolled member. Three of the market leaders in selling Medicare Advantage plans include Aetna, Humana, and United Healthcare.

Rules that CMS put in place Sept. 15 to prevent “churning” (encouraging customers to enroll in a different plan each year so the agent can receive a higher commission associated with the first year of enrollment in a health plan) have had the unintended consequence of increasing agent commissions across the board.

It appears as if new changes will be put in place to correct this problem next year as both Senate Finance Chairman Max Baucus, as well as Pete Stark, who chairs the House Ways and Means Health Subcommittee have mentioned plans to cap commissions. In addition, both Humana and UnitedHealth have weighed-in supporting CMS corrective action.