CVS Health's Aetna unit and Elevance Health last week turned their backs on part of the Medicare plan market.
The issuers announced Wednesday that they would stop paying commissions on new Medicare Advantage plan and Medicare Part D drug plan sales in some markets Friday. States affected include California, Connecticut, New York and Texas.
One Medicare plan agent in New York state, Jerry Cohen, estimated that the commission changes have affected about 35% to 40% of his Medicare plan business.
Jessica Brooks-Woods, the CEO of the National Association of Business and Insurance Professionals, put out a statement calling for insurers to work with NABIP to make sure consumers get help with choosing the right health coverage.
"This disruption hits particularly hard at a time when seniors are already grappling with higher prescription costs and shrinking benefits in their Medicare Advantage plans," Brooks-Woods said.
What it means: All financial services professionals with clients who use Medicare Advantage plans, Medicare drug plans and Medicare supplement insurance policies need to make a point of understanding the changes in the market, whether they normally help clients with those arrangements or not.
The clients with the affected plans who want to continue to have agent help with managing their coverage may have to rush to choose new, commission-paying plans and may have trouble getting commission-paying plans that will cover the hospitals, physicians and prescription drugs they now use at any price.
The backdrop: Medicare Advantage plans provide an alternative to original Medicare for about 34 million of Medicare's 68 million enrollees, and stand-alone Medicare Part D prescription drug plans provide prescription benefits for about 23 million of the enrollees.
The annual enrollment period gives people who have original Medicare, original Medicare with Medicare supplement insurance or existing Medicare Advantage or Medicare drug coverage a chance to sign up for a new Medicare Advantage plan or Medicare drug plan coverage. People with Medicare Advantage plan coverage can use the annual enrollment period to return to Original Medicare.
The annual enrollment period for 2025 coverage started Oct. 15 and ends Dec. 7.
The Centers for Medicare and Medicaid Services, the agency that oversees the Medicare plan program, has been tightening funding levels and marketing rules in recent years.
An Inflation Reduction Act provision that caps enrollees' out-of-pocket spending on covered drugs at $2,000 per year has led many issuers to increase premiums and deductibles and narrow their "formularies," or lists of covered drugs, to offset the impact of the new out-of-pocket spending cap.
In the summer, many Medicare market players were predicting that the annual enrollment period for 2025 could be a nightmare.
Fran Soistman, the chief executive officer of eHealth, a web-based health insurance broker, said in August that CMS should consider extending the annual enrollment period to help consumers cope with the confusion.
A few weeks later, Centene's WellCare unit announced that it would stop paying commissions on drug plan sales and renewals.
Non-commissionable plans: Zeroing out commissions is a way for insurers to stop selling unprofitable products without formally withdrawing the plans from the market.
If agents fail to get appointed to offer plans sold by issuers that pay no commissions, they have a difficult time saying much about those issuers' plans. That means agents may have difficulty talking about the zero-commission plans even when they want to recommend them.
The last major wave of sudden commission eliminations hit in 2015 and 2016, when health insurers were expressing displeasure about management of the Affordable Care Act exchange plan program. In recent years, the ACA exchange program market has stabilized, and issuers have resumed paying commissions.
