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What Are the Proposed CMS Commission Changes for 2025?

In April 2024, the Center for Medicare and Medicaid Services announced a new ruling that will change how insurance brokers and insurance agents receive commission. 

More specifically, this CMS 2025 proposed rule will affect commissions for Medicare Advantage and Medicare Part D plans.

This change creates a new compensation structure for insurance agents and brokers, consolidating commissions and administrative fees. It also raises compensation caps in accordance with fair market value for the insurance plans.

This ruling is also part of a broader effort by CMS to encourage transparency and fairness across marketing procedures for Medicare beneficiaries. It’s intended to provide more clarity and efficiency for insurance agents who work with the Medicare program. 

Let’s take a closer look at the 2025 CMS proposed rule for commission changes and what to expect.

Focus on Increased Transparency

The biggest change in the CMS proposed rule 2025 is how commissions are structured. 

In the past, insurance agents could earn commission for the plans they sell, but they could also receive additional compensation in the form of administrative fees. These administrative fee costs are typically used to cover expenses such as licensing fees, travel costs, and training.

This meant that payment models could look radically different across different insurance agencies. For some agents, administrative fees made up a significant portion of compensation, but others were focused primarily on commission.

The CMS 2025 proposed rule provides an official definition of compensation that includes commissions, administrative fees, and other payments. By creating a clearer, more efficient payment structure, CMS provides transparency for insurance agents and levels the playing field. 

This change also makes for more efficient administrative procedures, as insurers no longer need to report administrative fees separately.

Impact on Beneficiaries

As briefly mentioned, the new 2025 CMS proposed rule is part of a broader effort to increase health equity for Medicare beneficiaries. 

The increased transparency in compensation for agents should also result in more transparent Medicare plan pricing, as agents are no longer incentivized to promote the products with the highest commission rates.

The new rule encourages insurance agents to focus on educating potential beneficiaries and finding the plans that are most appropriate for their needs. In doing so, it helps reduce the possibility of agencies using administrative fees to incentivize unethical marketing practices.

The new ruling also specifies that contracts can no longer use language encouraging beneficiaries to enroll in a specific plan. This disincentivizes insurance providers from offering higher commission rates or bonuses for specific plans. 

In the past, this practice meant that beneficiaries weren’t always shown a full range of available plans in their decision-making process, and may have been encouraged to choose a plan that didn’t fit their needs.

For patients interested in CMS Medicare insurance, this ruling should result in a smoother, more transparent sales process. It’s also combined with other marketing best practices – for example, agents now need to use a scope of appointment form for CMS in which prospective beneficiaries specify which insurance products they want to learn about. 

Impact on Agents

Lastly, this new ruling will impact how insurance agents sell Medicare plans and other healthcare products. 

Notably, the cap on total compensation allowed will increase by $100 for each initial enrollment and $50 for each renewal. These changes are designed to align compensation levels with the current economic market.

The CMS proposed rule 2025 also eliminates some administrative challenges for insurance agents, brokers, and insurers, as there’s no longer a need to document and report complex administrative fee structures. Instead, commissions and administrative fees will be reported together as total compensation.

While this ruling offers some positives for insurance agents and brokers, it could come with some challenges. Perhaps most significantly, agents and brokers will no longer receive compensation for administrative fees like training, business tools, and licensing costs. 

This means that agents and brokers may need to adjust their budgets and business strategies to account for this shift in compensation.

Explore Your Medicare Options With Senior Insurance Agency

The new CMS Medicare insurance commission changes will not take effect until 2025. However, many agencies are already adjusting their operations accordingly.

The shift in compensation is ultimately intended to provide transparency and clarity for both agencies and beneficiaries when navigating the wide range of available plans. It ensures that insurance providers, agents, brokers, and beneficiaries are all on the same page in regard to compensation.

At Senior Insurance Agency, we never recommend plans based on commission, so this shift in admin fees won’t affect how we run our business or work with clients. We help patients find high-quality and cost-effective healthcare coverage options. Our team also provides a range of other senior insurance services, including dental and vision insurance, life insurance, and more. 

Our insurance agents in Sparks, NV provide guidance and support for beneficiaries throughout the entire state. Get in touch today to get started and see how we can help.

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