How Do Insurance Agents Make Money in the Medicare Space?

Posted on April 7, 2025 By Jeff Snyder

If you’re looking to find a new Medicare insurance plan this year during the Annual Enrollment Period or another time, one thing we’ll always suggest is working with a licensed insurance agent. They can help you navigate the many choices of Medicare insurance plans and find one that may suit your needs. But can you trust that your licensed insurance agent is giving you sound advice that’s based on your needs and not what they’re getting paid?

Today, we’re going to demystify the payment methods that allow agents to earn their living without pushing the cost on to you, the consumer.

Payment from Initial Enrollment

One of the primary ways licensed insurance agents earn money is when a consumer enrolls in a new plan. For instance, this can be when you enroll in your very first plan or if you enroll in a new plan that’s unlike what you were previously enrolled in. The maximum amounts of commission for Medicare Advantage and Medicare Part D sales that are payable to licensed insurance agents is regulated by the Centers for Medicare & Medicaid Services (CMS) and updated each year. These maximum commission amounts also vary depending on the state and region the plan is in, as well as the insurance provider itself.

These commissions are paid by the insurance company offering the plan, though companies are not required to pay the CMS-regulated maximum. This allows the licensed insurance agent to help you find a Medicare insurance plan without charging you a fee for their services. In fact, it’s illegal for an agent to charge you for Medicare insurance enrollment services. A plan you enroll in yourself will cost the same as an agent-assisted enrollment.

After Initial Enrollment

If you’re concerned that being paid to sell you a new plan may bias an agent you work with, don’t worry! As long as you’re working with an independent licensed insurance agent, one who works with multiple insurance companies, and not a captive agent, one who works for only one company, the agent should be doing their research and doing their best to find you the right plan that meets your unique needs. There’s also another way that agents make money, and it’s great for consumers like you. If you end up sticking with your plan for another year, the agent who helped you enroll in that plan gets paid by the insurance company again. In this case, the agent receives a renewal commission that’s equal to half the amount of money they received initially for a new enrollment or an “unlike plan type” enrollment change so long as you remain in that plan or make a “like plan type” change (e.g., changing from one MAPD to another).

Why are renewal commissions for agents great for consumers? These renewal commissions can really add up, which ensures that, even if you stick with the same plan, the agent is still getting something. Think about it this way. If your agent suggests enrolling in a new, but similar plan, it’s likely for a good reason, since they’re getting paid either way. The other benefit of these payments is that they incentivize an agent to help you find a plan that you’re continually satisfied with. They’re essentially a reward to your agent for finding you a plan you love the first time. So, if you stick with your plan for another year, your agent still gets a renewal fee, whether you meet with them or not.

Depending on the insurance carrier and Medicare insurance plan type, there may be a lifetime renewal commission or they may be capped after five or six years. Luckily, by that time, it may be a good idea to review your plan to make sure it still matches your health care needs anyway.

Types of Agents

Whether an agent is a captive agent or an independent agent can also factor into how they make their money when it comes to selling plans. Captive agents are employed directly by a specific company to sell their insurance plans. They usually receive a salary like any other employee, though may also earn commission for the plans they sell. Don’t worry, even though they’re tied to only one company, they’re still required to follow the rigorous regulations set forth by CMS.

Instead of being employed by the carriers, independent agents need to be contracted with individual plans to sell them.

ome of the most common agents you’ll work with are independent, like those at Chastain Insurance Agency. Unlike captive agents, independent agents can work with multiple carriers and are sometimes called licensed insurance brokers. Instead of being employed by the carriers, independent agents need to be contracted with individual plans to sell them. This means they can only sell plans they’re contracted to sell and earn commission from a carrier for a sale. Both types of agents can help you, but unless you’re only interested in a plan from one carrier, we suggest working with an independent licensed insurance agent or licensed insurance broker.

Trust is an important facet of any relationship. If you’re working with a licensed insurance agent, you need to trust that they’re working to help you find a Medicare insurance plan that fits your needs. After all, your choice of Medicare insurance plan can influence more than just monthly premium; it can affect your plan network, coverage options, any extra benefits that may be available, and your out-of-pocket costs. Knowing how your licensed insurance agent earns their living can add to that all-important trust and help you feel more secure in your coverage.

This entry was posted in Medicare Insurance and Tagged Chastain Agency LLC, Gainesville GA