Ask The Medicare Specialist

QUESTION:

Aaron, I’m 61 and my husband is Question from Beth:

63. I’ve been reading your Sunday column for years now and I can assure you that you’ve convinced me to be a future customer! My question is, and wondering if others might also be in the dark, are the commissions received for your services higher, lower, or relatively the same as other sellers of Medicare plans? Also, is there a fee per person over and above any commission and does that fee vary widely? It seems like a no-brainer to use The Health Insurance Store, if not for the numerous billing errors and questions that will arise.

ANSWER:

Let me first make it clear that we never charge a fee for a consultation or advice, even if our recommendation is for someone to choose a plan that doesn’t result in a commission. I estimate we tell close to 25% of people who reach out to us for to do just that. Always making sure we take care of the client’s best interests regardless of how it affects our paychecks is the theme of our mission statement I wrote over 15 years ago. We’ve never wavered from that commitment and never will. Unfortunately, that’s not the case for many agents and brokers as the Medicare field has become more crowded and competitive. Add in that commissions on Advantage Plans are extremely generous and it’s not a good formula for ensuring consumers, especially older seniors, get the best information and honest guidance.

The hierarchy of commissions with Medicare almost resembles network marketing. The amount of commission the agent gets depends on how far down the ladder he or she is and how many other hands the commissions go through before it gets to the selling agent.

As I became more educated on how it all worked and as we grew to be one of the highest volume Medicare agencies in Western PA, I negotiated better commissions from my “upline” agency, the entity who signed my commission checks. They are also known as “Field Marketing Agencies,” aka FMOs.

I now get most of my commissions directly from the insurance companies. However, the FMO gets an override, which is a kick back, so to speak, for every policy The Health Insurance Store sells. In some instances, there’s another entity or FMO who also takes a cut or something off the top as well. I don’t like the system to be perfectly honest and these FMOs often don’t care how agents sell policies, just that they’re generating commissions. After they have recruited an agent and he or she has gotten their license, they’re often handed a bunch of brochures and applications and pretty much told, “Now go sell something kid.”

Here’s the description/definition of an FMO from one of the biggest in the country: “FMOs provide independent agents with perks and resources and get them contracted with carriers to sell plans.” Notice there’s no mention of training. And when I clicked the link to get more information on what their job as an FMO is, again, there was zero reference of training on the different types of plans or teaching them how to best serve potential clients. It was all about getting more leads, selling more policies, and staying “compliant,” which is much different than remaining ethical.

All that being said, what amount of commission myself or another agent gets has no bearing on what people pay for their polices. That’s the same regardless of who sells it or if one goes directly through an insurance company, which I don’t recommend. Insurance company representatives are paid to sell their employer’s policies only and generally get bonuses for each person they sign up. You certainly won’t get their competition’s plans compared side by side. And those who call companies that only sell Advantage Plans also won’t get Supplements explained and contrasted with HMOs and PPOS at all.

What agent or agency someone chooses to help advise them on Medicare should come down to experience, knowledge, reputation, and what customer support is offered after the application has been submitted and the agent is paid their initial commission.

For example, my stepfather lives in Florida and got his policy prior to me becoming licensed there. He recently got a bill he shouldn’t have and was told by the provider it was due to Medicare not covering the service, which was actually bad information. When he called the agent who sold him his policy to ask for help, she told him he needed to call Medicare himself. Our clients would never need to do that. We investigate why there was an erroneous bill, denied claim, higher than expected prescription costs, etc., and solve the problem. It’s not unusual for us to spend an hour or more on the phone taking care of a single client issue.

April 1st of this year will mark the 16th year anniversary of The Health Insurance Store. Our least tenured agent has over three years’ experience and the average is almost 10. All spent months training, sitting in on appointments with senior agents, and having their own appointments supervised until we were 100% certain they were properly prepared with the understanding of how they are to take care of current and perspective clients; the same way they would their own parents. In addition, our agents are W2 employees who work out of our Connellsville or Forest Hills offices 40 hours a week. This is extremely rare in the Medicare business. Most agents work on a 1099 basis and are self-employed, making it extremely hard to keep tabs on them with limited authority on how and when they work. Most who are on a 1099 rarely, if ever, come to the home office. Many have FMOs in other cities or states so there’s no office to visit at all.

Who you select to guide you through the process of getting Medicare and a Supplement or Advantage Plan is one of the most important decisions you may ever make. Choose wisely.

Thanks for reading everyone! Keep the great questions coming to me at aaron@getyourbestplan.com.