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Medicare Supplement Possible Commission Reduction Alert!


You may not be aware that the US Senate and House of Representatives have bills before them, which would essentially reduce commissions for producers of Medicare Supplement products.   You may know about this, but I am afraid that most Med Supp producers are not aware of this situation, so I am asking that you please forward this letter to your agency force.

The two bills were introduced in the Senate by John Kerry (D--MA) and in the House by Pete Stark (D-CA). The bills are mirror images of each other and are entitled, "Meigap Medical Loss Ratio Improvement Act." Essentially they call for increasing the loss ratios of Medicare Supplement companies from the existing 65% for individual Med Supp sales, and 75% for group Med Supp sales, to 80% for individual MS sales, and 85% for group MS sales. This is similar to the way increased Medical Loss Ratios were written into PPACA 2010 ("Obamacare").

Many in your agency force are familiar with the cuts in compensation for Group Health and Individual Major Medical producers as a result of PPACA 2010. Many agents in our organization, the National Association of Medicare Supplement Advisors, Inc., (NAMSA) have verified to me that they have been subject to 50% cuts in commission since the adoption of PPACA. Now, Senator Kerry and Representative Stark seem offended that "Medigap" company loss ratios were left out of PPACA and want the same regulations passed on to them that were included in PPACA.

Your agency force can see this dreaded information for themselves by going to, and hitting the bill number circle and punching in the number of either of the bills in the search box, then selecting “Text of Legislation.” The Senate bill is: S.1416, and the House bill is: H.R.2645. They are quite simple--less than one half page--but very direct. We, in the Med Supp industry have gotten along with the current "Baucus Amendment" loss ratios over the past two decades.  But some people in Washington, are not aware of, or have overlooked the massive amount of time Medicare producers extend to their clients.

Few Med Supp producers in the U.S. know about these measures, and the threat they present to our industry. The threat is real.Originally, our members felt that the Stark measure would never pass the House, thus leaving it as a dead issue. However, a recent development has occurred. A new joint committee has been charged with recommending to the entire Congress, by February 21, the 2012 passing of the 60-day extension for the "payroll tax holiday" of 2011. That is where we are concerned.

Since Kerry has a great amount of influence in the Senate, (and even though Stark has been minimized in his role in the House), it is entirely possible that their measures may sneak into the "payroll tax holiday" measure in a stealthy "bipartisan" agreement, much like the Keystone XL pipeline measure found its way into the House version last month.

Thus, NAMSA is concerned that unless we act now, it may be too late to put a stop to the Kerry/Stark proposals. We have chosen a variety of techniques to notify Medicare Supplement policyholders that their trusted agents may receive a 50% cut in commissions should this MLR proposal become law. We are preparing printed statements from producers as to the value of their work in helping Medicare beneficiaries wade through the maze of Medicare information, which has become the norm.  We are also preparing a You Tube video for distribution discussing the same. Producers are also asking clients to present a few sentences illustrating the value of their agents in helping them sort out Medicare matters.

The shameful part of these measures is that they would not help premium rates for more than one or two years for policyholders, but would have a great impact on producers' ability to offer the Medicare public the service they have become accustomed to. In essence, the bills shortchange Medicare enrollees at a time when producers explaining Medicare matters to them is more needed than ever.

We are of the belief that lawmakers have no idea of the amount of time and work involved in helping explain Medicare to clients at age 65 and nearly every year afterward. So, it is our intent to present them with testimony on our and our clients' behalf. To do this, we need more members, and we are asking your agency force to join us in helping us in this project. Agents can join our association as an "Associate" or sustaining member for $100 per year, by simply going to the following 2012 NAMSA Dues link,

Producers, we really need your support in assisting us in this venture. In short, we are trying to preserve at least half of your Med Supp income. If the measures were to pass, companies will have no choice but to react in the same manner as did the Major Medical companies as a result of PPACA. Your membership fee includes a weekly NAMSA Newsletter which updates members on Medicare matters, including Medicare itself, Medicare Advantage, Medicare Supplement and Medicare Part D.

As you will note by hitting the Thomas link, the bills call for enforcement of this action to go into effect Jan. 1, 2014. Think of it this way. We are trying to protect your income from being cut in half, year, after year, after year.

A Hundred Dollar bill will help us to try to defeat this and we would certainly welcome your needed support. Even if the measure does not come up in the "tax holiday extension" measure, we need to make certain that lawmakers are aware of our service and defeat it when it is debated.

We sincerely thank you for the opportunity to expose this problem to your agency force. As you may or may not know, there are other measures before Congress, which deal with Medicare Supplement policyholders who choose Med Supp Plans C or F. They will be subject to an additional 30% increase in their Part B premiums, should some of these ideas gain traction. We intend to help stop that.

My best to you and your agents for a continued flourishing 2012,

Ron Iverson, President and Executive Director
National Association of Medicare Supplement Advisors, Inc.
Telephone: 1-888-333-1844
Postal Address:  PO Box 4459, Helena, MT  59604