On June 1, 2010, the Medicare landscape changed. What you don't know can cost you sales or, at a minimum, lost opportunities to save your clients' money. Here are four things you should know:
- Plan F isn't the only game in town. What's the difference between a Plan F and a Plan G? Today, it is only the Part B deductible, valued at $155. So, if the premium difference between an F and a G is greater than $155, many agents are opting to sell the Plan G. You will find some cases where the difference can be $200-$300, making it a good buy for your client.
- Commission rates can be deceiving. Many agents don't know that some carriers have disguised commission reductions, making it harder to compare plans. For example, one carrier may pay a fixed amount rather than a percentage of the premium. Commission rates between carriers for a client turning 65 may prove to be roughly equal but if you are writing an older client, the agent gets paid less under a fixed commission amount.
- Part B offset affects your commission. Many carriers now reduce the agent commission for the Part B deductible premium, meaning $155 of the premium is non-commissionable. In order to promote a higher published commission rate, some of the newer carriers are offsetting the Part B for a higher amount, up to $200! This $45 difference means that while the numerator remains the same, the denominator might vary. This allows a carrier to claim a higher commission rate, but what they don't tell you is the commissionable premium is reduced!
- Some advance commissions are really loans. Nine- and 12-month advance commissions are fairly common in the industry. That makes a lot of sense for a newer agent in the business since renewals are not yet a significant portion of the agent's monthly income. Beware of some carriers who have a finance charge of up to 1 percent per month. In this situation, the agent is sacrificing 12 percent of the commission in order to have a 12-month advance.
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