Whether it’s during the Annual Enrollment Period (AEP) or one of the other windows of time where you can find Medicare plans, you’ll be on the hunt for Medicare coverage. It’s a good idea to at least review your plan each year to ensure it still meets your needs. If you’re looking for a new plan, we highly suggest working with an insurance agent, since they can be useful guides. But, how can you be sure that they’re acting trustworthy or in your best interest? After all, you’re trusting a relative stranger (in some cases) with your health care.
We get it, so you don’t have to just take our word for it. Let’s look at why we feel it’s a safe bet to trust an insurance agent when searching for a Medicare plan.
A central reason you can trust the opinions of agents are the regulations put in place by the federal government and the Centers for Medicare & Medicaid Services (CMS) to protect consumers. While there isn’t a best interest standard like there is with life insurance and annuities, CMS regulates each step of the enrollment process so that agents are acting in an ethical and honest manner. Even marketing is heavily regulated, with one company, eHealthInsurance Services Inc., being fined $50,000 for misleading consumers after purchasing the domain name Medicare.com and sending confusing letters prompting the recipients to find new Medicare plans.
CMS regulates each step of the enrollment process so that agents are acting in an ethical and honest manner, even for marketing efforts.
Agents take compliance very seriously. One of the most popular and commonly written about topics on our sister site, the Agent Survival Guide, is compliance issues, a big part of which is compliance when working with clients. Whether that’s having compliant marketing or hosting a compliant educational event, quality agents are sure to keep up with the rules that govern their professions.
This leads to the next reason you can generally trust the agent you work with. Agents undergo a lot of training and certification to be able to do their jobs. First, they have to be certified with each plan they offer, showing that they have a great depth of knowledge for every Medicare and insurance plan in their arsenal. Many insurance companies that offer Medicare plans also have a three-strikes-and-you’re-out policy, where if you fail certification for their plans three times, you can’t market those plans for the rest of the year.
Agents have to be certified with each plan they offer, showing that they have a great depth of knowledge for every Medicare and insurance plan in their arsenal.
Most agents are required to get a further certification that shows they understand Medicare fraud, waste, and abuse compliance laws. The most common of these is an AHIP certification, which many carriers (the industry name for insurance companies) require agents to have as part of the certification for their own plans. Agents must pass an exam with a score of 90 percent or higher.
So, agents are highly trained and strictly regulated to act in an honest and legal manner toward consumers, but they’re also financially incentivized to make sure their clients love the plans they choose. A quick look at how insurance agents make money through Medicare shows this. While the numbers change each year, agents make a certain amount of money in commissions when they enroll somebody in a new plan. This amount is determined by the plan that’s being enrolled in, with a maximum set by CMS each year. This should incentivize agents to push you to a new plan each year, right?
Agents are also given a commission if you stay with that plan the next year, incentivizing finding you a great plan the first time.
Not so fast. They are also given a commission if you stay with that plan the next year. This commission is roughly half of the original commission but can really add up with no additional work for the agent or client. So, while an agent may make more money if they had each client find a new plan each year, it would also be incredibly time consuming. From a purely cynical business sense, it would make much more sense to find the right plan the first time, make half the money, and spend that extra time expanding the client base. It’s also worth noting that similar plans (plans with comparable coverage) are treated as though you’re staying on the same plan for commissions. So, if your agent is suggesting you change to a “like plan type,” it’s probably for a good reason.
Outside of finances, there’s another good reason why agents are inclined to try to find you a great plan the first time, instead of the one that suits their wallets the best. If you’re unsatisfied with the work they’ve done, the agent may not get a second chance at finding you a plan because you’ve taken your business elsewhere. Even in smaller towns, the Medicare insurance industry is still a marketplace, and if an agent isn’t doing good work for their clients, other people will help them. Tools like the Medicareful Plan Finder can help you see plans in your area and get in touch with an agent you can trust.
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Trust is an essential component of the agent-client relationship. But despite everything we’ve said here, remember that you don’t need to blindly trust what your agent is suggesting for you. You are the ultimate decider for your coverage and should be an active participant in finding your Medicare plan. That means being at least familiar with Medicare and reviewing what the agent suggests. An agent is a helpful guide, but without your input, they may not find a plan that fits your needs as well as they could!