Producers selling Medicare Advantage plans face a tall order—keep your business afloat while facing proposed government cuts to the program and a potentially new commission schedule that many agree will cut into overall profit.
Nevertheless, producers in the market say they will continue to sell Medicare plans both for profit and to fulfill a sense of duty.
“Some agents say [Medicare Advantage] isn’t profitable and they won’t sell it, but it still provides a big chunk of change to my agency,” said Linda Seltzer, an agent with Teague Financial Insurance Services in La Mesa, Calif. “There are more and more people turning 65 every day, and once they’re in a plan, it’s just money forever.”
Seltzer, who has been selling Medicare products for 12 years, conceded that working with clients one-on-one to assess options and change providers every year “doesn’t necessarily make money,” but “not everyone wants an update every year.” Besides, she views her role as a producer is to serve to her clients.
“Everything we do can’t be about making money,” she said. “It’s a service we feel we have to provide. All of a sudden, you hit 65 and your whole available product line is different. Unless you have somebody to really help you, you don’t get it.”
Seltzer’s comments follow a report from America’s Health Insurance Plans (AHIP), which concluded that beneficiaries could pay as much as $900 more in 2015 if the Centers for Medicaid and Medicare Services (CMS)’ proposed cuts take effect.
The cuts have angered many in the industry, including NAHU’s John Greene, who believes the changes represent “a solution in search of a problem.”
“This program is under budget by 40%. It has a 90% satisfaction rate among beneficiaries. It’s operating well,” Greene stressed. “It’s pretty much on autopilot.”
AHIP, NAHU and other industry organizations are fighting the proposed cuts, along with a change to Medicare Advantage’s commission schedule. Instead of paying agents for selling a policy to a first-time buyer for the entire 12 months—beginning on the date of the sale and ending the following year—the compensation schedule will be pro-rated to run to the end of the year.
The resulting decrease in commission will drive many agents out of the Medicare business, many industry experts fear.
For long-time Medicare producer Patrick Freeman, however, the changes are a long way from certain.
“I don’t think it’s certain these cuts will go through. I think you’ll see a lot of pushback from seniors,” Freeman said. “They took away money last year, and people were really angry. It’s not a done deal yet.”