How Do Medicare Agents Make Money?

Medicare agent and Client
Medicare agent and customer

How Do Medicare Agents Make Money?

Trust is essential in any relationship. Many people wonder how do Medicare agents make money? Learning how a Medicare agent makes their money is a great way to build trust between you and your agent. If you’re looking to find a new Medicare plan this year during the Annual Enrollment Period or another time, one thing we’ve suggested in the past is working with a Medicare insurance sales agent. They can help you navigate the many choices of Medicare plans and find one that may suit your needs. But, can you trust that your Medicare agent is giving you sound advice that’s based on your needs and not what they’re getting paid?

You may be interested in learning how insurance agents specializing in Medicare plan sales make their living, especially since you don’t need to pay them a dime. After all, you want to be sure that the plan they’re suggesting really suits your health and budget and isn’t just the plan they’ll make the most money on. You also want to be able to trust that, if they advise that you purchase an additional insurance plan to bolster your Medicare coverage, you actually need it.

Today, we’re going to demystify the payment methods that allow agents to earn their living without pushing the cost on to you, the consumer.

Payment from Initial Enrollment

One of the primary ways how Medicare insurance agents earn money is when a consumer enrolls in a new plan. For instance, this can be when you enroll in your very first plan or if you enroll in a new plan that’s unlike what you were previously enrolled in. The maximum amounts of commission for Medicare Advantage and Medicare Part D sales that are payable to Medicare agents is regulated by the Centers for Medicare & Medicaid Services (CMS) and updated each year. These maximum commission amounts also vary depending on the state and region the plan is in, as well as the insurance provider itself. In 2022, the maximum commission amounts are $573 for a new Medicare Advantage plan with drug coverage (MAPD) and $87 for a new Part D plan.

In 2022, the commissions are $573 for an initial MAPD enrollment and $87 for an initial PDP enrollment.

These commissions are paid by the insurance company offering the plan, though companies are not required to pay the CMS-regulated maximum. This allows the Medicare agent to help you find a Medicare plan without charging you a fee for their services. At the same time, there isn’t any added cost you must pay for using an agent. A plan you enroll in yourself will cost the same as an agent-assisted enrollment.

After Initial Enrollment

If you’re concerned that being paid to sell you a new plan may bias an agent you work with, don’t worry! As long as you’re working with an independent agent, one who works with multiple insurance companies, and not a captive agent, one who works for only one company, the agent should be doing their research and doing their best to find you the right plan. There’s also another way that agents make money, and it’s great for consumers like you.

If you end up sticking with your plan for another year, the agent who helped you enroll in that plan gets paid by the insurance company again. In this case, the agent receives a renewal commission that’s equal to half the amount of money they received initially for a new enrollment or an “unlike plan type” enrollment change so long as you remain in that plan or make a “like plan type” change (e.g., changing from one MAPD to another). In 2022, the renewal commission maximums set by CMS are $287 for MAPD enrollments and $44 for PDP enrollments.

In 2022, the renewal commission maximums set by CMS are $287 for MAPD enrollments and $44 for PDP enrollments.

Why are renewal commissions for agents great for consumers? These renewal commissions can really add up, which ensures that, even if you stick with the same plan, the agent is still getting something. Think about it this way. If your agent suggests enrolling in a new, but similar plan, it’s likely for a good reason, since they’re getting paid either way. The other benefit of these payments is that they incentivize an agent to help you find the right plan. They’re essentially a reward to your agent for finding you a plan you love the first time. So, if you stick with your plan for another year, your agent still gets a renewal fee, whether you meet with them or not.

Depending on the insurance carrier and Medicare plan type, there may be a lifetime renewal commission or they may be capped after five or six years. Luckily, by that time, it may be a good idea to review your plan to make sure it still matches your health care needs anyway.

Types of Agents

We briefly discussed the two different types of insurance agents when we talked about renewal commissions. Whether an agent is a captive agent or an independent agent can also factor into how they make their money when it comes to selling plans. Captive agents are employed directly by a specific company to sell their insurance plans. They usually receive a salary like any other employee, though may also earn a commission for the plans they sell. Don’t worry, even though they’re tied to only one company, they’re still required to follow the rigorous regulations set forth by CMS.

Instead of being employed by the carriers, independent agents need to be contracted with individual plans to sell them.

Some of the most common agents you’ll work with, and the kind you can connect with on Medicareful, are independent. Unlike captive agents, independent agents can work with multiple carriers, sometimes called insurance brokers or Medicare insurance brokers. Instead of being employed by the carriers, independent agents need to be contracted with individual plans to sell them. This means they can only sell plans they’re contracted to sell and earn commission from a carrier for a sale. Both types of agents can help you, but unless you’re only interested in a plan from one carrier, we suggest working with an independent agent or Medicare broker.

Trust is an important facet of any relationship. If you’re working with a Medicare agent, you need to trust that they’re working to help you find a Medicare plan that fits your needs. After all, your choice of Medicare plan can influence more than just monthly premium; it can affect your plan network, coverage options, any extra benefits you’re entitled to, and your out-of-pocket costs. Knowing how Medicare agents make money can add to that all-important trust and help you feel more secure in your coverage.

Ready to find a Medicare plan or connect with a trustworthy licensed sales agent to help guide you through the process? Head over to All you have to do is enter your zip code to see Medicare plans in your area. There, you can also compare the costs and coverage of different plans, and when you’re ready, get in touch with a local independent insurance agent to enroll in a plan!

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