SelectQuote Sees Drop in Medicare Plan Sales Due to Payment Delay
The agency will enter the annual enrollment period with fewer new agents than it wanted.
SelectQuote is still happy with the Medicare plan market, and the insurance agency is hoping for strong sales in the upcoming annual enrollment period.
But one of the big Medicare plan issuers it represents has changed its commission payment schedule, and that has forced the company to adjust its Medicare plan sales strategy for the upcoming annual enrollment period, company executives told securities analysts Friday.
The new commission structure “resulted in a temporary capital constraint, which prevented us from hiring a larger agent class,” Ryan Clement, SelectQuote’s chief financial officer, told the analysts during a conference call.
The cut in the number of Medicare agents will probably lead to a 10% to 15% drop in Medicare plan sales this fall, Clement said.
He noted that the issuer’s overall commission payment rate is still attractive.
What it means: Clement’s comments add to the evidence that the upcoming annual enrollment period could be challenging because of factors such as changes in federal Medicare plan support levels, Medicare plan marketing rules and Medicare Part D prescription drug plan benefit design requirements.
The annual enrollment period for Medicare Advantage plans and Medicare prescription drug plans for 2025 is set to start Oct. 15 and run through Dec. 7.
SelectQuote: SelectQuote is an Overland Park, Kansas-based agency that sells life insurance, auto and home insurance, and products aimed at older consumers, including Medicare Advantage plans, Medicare supplement insurance policies and final expense policies.
The earnings: SelectQuote has a fiscal year that begins on July 1. It held the conference call to go over earnings for the quarter that ended June 30 with the analysts.
The agency reported a $31 million net loss for the quarter on $307 million in revenue, compared with a net loss of $48 million on $222 million in revenue for the comparable quarter in 2023.
Commission revenue increased to $166 million, from $80 million.
The number of policies sold increased because the company did a better job of picking leads to target, Clement said.
Growth at a company health care services arm should compensate for a temporary disruption in Medicare plan sales volume and push profit margins up to around 20%, he predicted.
Credit: CMS