The Medicare Agent Squeeze
Zachary Freeman has been a Medicare agent for nearly 12 years and described the current environment for agents this way. “It truly is the wild, wild West.”
Freeman is an agent at Ann M. Wiley Insurance in Conneaut, Ohio, where he works solely with Medicare clients. He told InsuranceNewsNet the current Medicare market is “chaotic.”
“We’re seeing insurance companies cutting commissions. Making the market harder for agents to navigate and be able to help their clients. We’re seeing a lot of plans pulling out from certain areas. It’s chaos,” he said.
Several hundred Medicare Advantage and Part D plans have stopped paying agent commissions on new enrollments over the past three years, although commissions on renewals continue to be paid.
Freeman said he has lost between $20,000 and $30,000 in commissions in the past year but remains committed to helping clients choose the plan that best suits their needs. “I’ve taken a hit. But my main priority is the client.”
In addition to the dropped commissions, Freeman said that he and his clients are affected by carriers removing Medicare Advantage plans from the market.
“In the past couple of years, we’ve seen a carrier come in with a rich-benefited plan during open enrollment season. They’ll be in the market for a year, and one of two things will happen. They’ll pay commission on it for a year, then pull it out of the market completely. Or they will, as I like to put it, throw a bait at the end of the fishing line. They’ll throw the plan out there for two weeks or so in open enrollment and then take out commissions. So what they essentially did is create interest on the client side and give agents two or three weeks to talk about it with all their clients and then hold the ability to sell it, so those clients will still want it, but now the carriers don’t have to pay the agents.”
Freeman described the removal of Medicare Advantage plans and agent commissions as “a double-edged sword.”
“Insurance companies are definitely playing the game here. They’re putting rich-benefited plans out there, then cutting the agents away from them and trying to save money on the other end because they overshot their benefits. You’re seeing a lot of companies mismanage how many people they will have enroll in their plans when they do their predictions. Then when they’re two or three weeks into open enrollment, they realize they can’t afford to do this and they have to cut something, so they cut out the agent.”