The federal government is proposing to rein in health insurance companies that entice brokers with lavish bonuses to sell their Medicare Advantage plans by placing a firmer cap on broker compensation.
However, even with new guardrails in place, agents and brokers will still have strong financial incentives to move people into Medicare Advantage plans instead of pitching supplemental coverage for the traditional Medicare program.
Starting in 2025, brokers cannot accept more than $632, total, for each new Medicare-eligible person they enroll in a Medicare Advantage plan, according to the government’s latest proposed rule. This year, brokers earn $611 for each new Medicare Advantage sign-up, but they can still take in hundreds of dollars in extra referral payments, bonuses, and perks from insurance companies that offer them. Many smaller health plans have complained larger, dominant Medicare Advantage companies tilt the scales in their favor by offering those add-on payments to brokers, who then disproportionately steer older adults into those options.