Download - Applied General Agency

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For the purpose of calculating compensation, the movement by a beneficiary from
an employer group plan to an individual plan (either within the same plan sponsor
or between different plan sponsors) counts as an initial enrollment.
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Plan sponsors must not pay agents who are no longer appointed to sell in the State
(if required), agents who have not been annually trained and tested per the plan’s
policies and procedures with a passing score of eighty-five (85) percent, or agents
who have been terminated for cause by the plan.
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CMS does not differentiate between agents, brokers, general agents, general
agencies, FMOs, and distribution partners. It is the plan sponsor’s responsibility to
ensure that all of its contracted sales staff's compensation levels abide by CMS
rules.
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CMS compensation requirements do not apply to employed agents.
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If a contracted agent receives a base salary and sells exclusively for one plan
sponsor, that agent may be considered employed for purposes of applying CMS
agent/broker compensation requirements.
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While CMS does not dictate how plans should pay compensation (e.g., monthly,
quarterly, annually), CMS prohibits plans from paying compensation in advance (e.g.,
paying five (5) years’ residuals up front).
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Referral fees are equivalent to finder’s fees and governed by CMS regulations. This
means that referral fees must be included in compensation schedules and fall within CMS
compensation rules. While referral fees are part of total compensation, they are a onetime fee and not subject to the six (6)-year compensation cycle.
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Bonuses (announced or unannounced prior to payment) must be included in
compensation schedules and fall within CMS rules. A bonus does not fall outside CMS
rules because it was not announced to agents or brokers in advance.
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Compensation for dual enrollments should be paid independently (e.g., when a
beneficiary enrolls in both a section 1876 cost plan and a standalone PDP, compensation
should be paid for both enrollments.)
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When a beneficiary enrolls in an MA-PD plan, compensation should be paid using the
MA compensation amount. Plan sponsors should not pay both the MA and PDP
compensation amounts.
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For Medicare beneficiaries enrolling in a plan mid-year and having no prior plan history
as indicated on the compensation report, plan sponsors may pay the full year initial
compensation amount.
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A plan sponsor will have the opportunity prior to each contract year to determine that it
will no longer use independent agents and brokers. When a plan sponsor and/or a
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