How Does a Medicare Agent Get Paid?

How Does a Medicare Agent Get Paid? | Factors to Consider

Medicare agents are excellent options for those who are currently struggling to find the right Medicare plan for them. An agent, overall, can help you review different options that suit your needs and budget so that you can compare them and choose the one that best suits your needs.

However, many people wonder how Medicare agents get paid since they only represent insurance carriers. The following article will explain how a Medicare agent gets paid, as well as the main difference between the two agent types.

How Does a Medicare Agent Get Paid | The Basics

It’s important to note that, typically, you won’t pay for a Medicare agent’s services directly since they mostly get their payments through commissions. Keep in mind that agents either are employed by certain healthcare companies or have a contract with some companies that allows them to offer insurance plans.

Generally speaking, an agent can get payment from the initial enrollment, and then, they can get paid again through renewal commissions, unless we’re talking about captive agents since they can also earn money through salaries and bonuses.

There are two types of Medicare agents: Captive agents and independent agents. The payment methods for an agent may vary depending on the type of agent they are. Let’s go over each option so that you understand how they work.

Independent Agents

An independent agent is one that can partner with several different insurance companies. In most cases, this agent type can choose the policies they want to sell from particular carriers.

Here, the agents will likely get paid through commissions. Since they don’t work with one particular company, they won’t likely get fixed salaries, bonuses, or other health benefits. 

Considering these agents mostly earn through commissions, they will partner with different carriers so that they can earn more money. Moreover, if the client decides to stay on a particular plan for the following year, the agent may also get a residual commission payment.

On the other hand, if the client switches their plan with another agent, the former agent would have to return the commission. This is why independent agents often focus on providing much better customer service and care since having better service will translate to more commissions in the future.

Captive Agents

A captive agent is one that is employed by a particular insurance company. Since they only work with one insurance company, they will only market, service, and sell the products that the particular company offers.

When it comes to payments, captive agents tend to earn money through salaries and benefits that the insurance company offers; these benefits often involve commissions and bonuses. 

Captive agents get paid commissions according to the sale they’re making. However, considering that these agents are working directly with an insurance company, they are typically given a quota that they must hit if they want to stay employed.

One of the downsides to captive agents is that there’s a limited plan offering they can give to potential customers, which is something that not everyone enjoys. However, the payment process offers more benefits than the one for independent agents.

Bottom Line

Both agent types have advantages and disadvantages from the consumer’s and the agent’s perspectives. Overall, an independent agent will offer the consumer more insurance options but will only earn through commissions, whereas captive agents can earn salaries and bonuses but won’t have as many insurance options to offer.

We hope this article has helped you understand how Medicare agents get paid!