Medicare Agent Compensation Disclosure: What CMS Requires
CMS requires every Medicare carrier to give independent agents a written compensation disclosure each year. Here's what it must include, and what your agency should keep on file.
Every Medicare Advantage and Part D carrier that pays independent agents is required to give those agents a written compensation disclosure for the next plan year by October 1, and CMS caps what that compensation can be. If you sell Medicare, the medicare agent compensation disclosure requirements under 42 CFR § 422.2274 control three things that affect your agency directly: what you can legally be paid, when a carrier can take a payment back, and what records your agency needs on file if CMS or a carrier ever asks.
This is a different rule than the TPMO disclaimer you say on every call. The disclaimer is something you disclose to the beneficiary. The compensation disclosure covered here is something the carrier is required to give you, in writing, every year — and most independent agents have never actually seen the document that's supposed to exist for every plan they sell.
What CMS Requires Carriers to Disclose About Medicare Agent Compensation
Under the federal regulation governing agent, broker, and third-party requirements, every Medicare Advantage organization and Part D sponsor that uses independent agents must, on an annual basis by October 1, have a full compensation structure in place for the following plan year. That structure has to specify the payment amounts for both the initial enrollment year and the renewal year, and the carrier has to disseminate it — not just file it internally. (42 CFR § 422.2274(c)(6))
Practically, that means every carrier you're appointed with should have sent you (or your agency) something in writing before October 1 stating exactly what they'll pay for a new enrollment and what they'll pay if that client stays enrolled into a renewal year. If you can't point to that document for a given carrier, you don't have the disclosure CMS requires the carrier to have given you.
CMS separately caps the compensation itself. Agents and brokers can only be paid by MA organizations and Part D sponsors that meet the licensing, appointment, and compliance requirements in the same section, and payment is based on what CMS calls fair market value (FMV) — an amount CMS determines could reasonably be expected to be paid for an enrollment. (CMS, Agent Broker Compensation) CMS publishes the actual per-plan compensation amounts carriers report, including the current plan year's data, as a downloadable file on that same page.
Initial Pay, Then Half for as Long as the Client Stays
The structure itself hasn't changed in its mechanics from year to year, even though the dollar amounts move annually: an agent can be paid up to FMV for an initial enrollment, and up to 50 percent of FMV for each renewal year the client remains enrolled. (42 CFR § 422.2274(d)(3)) CMS describes it plainly: agents generally get a full payment the first year, and half as much from year two onward if the member stays in the plan or makes a "like plan type" change. (CMS, Agent Broker Compensation)
The compensation year itself runs calendar-year, January 1 through December 31, regardless of when during the year a beneficiary actually enrolled. (CMS, CY2027 Agent and Broker Training & Testing Guidelines) That calendar-year framing is exactly what drives the proration rule below, and it's the detail most agents get wrong when they're estimating what a mid-year enrollment is actually worth.
Two Different Ways a Carrier Can Take Compensation Back
This is the part of the rule that shows up on your agency's books as a chargeback, and it's worth separating into the two scenarios CMS actually describes, because they're not the same thing.
Rapid disenrollment: the client leaves within three months
If a beneficiary disenrolls from the plan within the first three months of enrollment — a "rapid disenrollment" — the carrier must recover the entire compensation paid for that enrollment, not a prorated share. CMS carves out specific exceptions where rapid disenrollment recovery doesn't apply: the beneficiary died, moved out of the service area, stopped paying the premium, gained or lost employer coverage, or a handful of other defined circumstances. (42 CFR § 422.2274(d)(5))
Mid-year disenrollment outside the three-month window
Separately, if a client doesn't stay enrolled for the full calendar year — even if they're well past the three-month rapid-disenrollment window — the carrier must recover a prorated share of whatever was paid, based on the number of months the beneficiary wasn't actually enrolled. CMS's own example: a beneficiary enrolls on turning 65, effective April 1, and disenrolls September 30 of that same year. The plan paid full initial-year compensation covering all twelve months, but the beneficiary was only enrolled for six. The carrier recovers six-twelfths of that payment — the three months before the April 1 effective date and the three months after the September 30 disenrollment. (42 CFR § 422.2274(d)(5)(iv)(B))
That second scenario is easy to miss because it isn't "rapid" at all — it can hit a client who stayed enrolled for most of a year. If your agency only watches for chargebacks in the first 90 days, this is the one that gets past you. AgencyView's guide to preventing chargebacks in the first 90 days covers the rapid-disenrollment window specifically; this proration rule is the reason that window isn't the whole picture.
Referral Fees Have Their Own, Separate Cap
If your agency pays or receives referral fees for Medicare leads, those are regulated distinctly from enrollment compensation. A payment for a referral into an MA or MA-PD plan can't exceed $100, and a referral into a standalone Part D plan can't exceed $25. Any organization paying referral fees has to disclose the amount. (42 CFR § 422.2274(f)) This is a flat dollar cap, not a percentage of FMV, and it doesn't move with the annual compensation adjustments — so it's worth checking any referral arrangement against the current figure rather than assuming last year's number still applies.
Licensing, Appointment, and the 85 Percent Testing Bar
None of the compensation rules above apply to an agent a carrier isn't allowed to pay in the first place. To be compensation-eligible, an independent agent must be licensed in every state where they do business, appointed with the carrier, and trained and tested annually — scoring 85 percent or higher on all forms of that testing. (42 CFR § 422.2274(b)(2)) CMS's own 2027 training and testing guidelines reiterate the same annual requirement for the current plan year, built around the compensation definitions, enrollment-year mechanics, and recoupment rules described above. (CMS, CY2027 Agent and Broker Training & Testing Guidelines)
A lapsed license or an expired appointment doesn't just stop new sales — it can mean the carrier isn't even permitted to pay you for business you already wrote. AgencyView's guide to multi-state license tracking covers how to keep that status visible before it becomes a compensation problem.
A Documentation Checklist for Your Agency
None of this requires a law degree to stay ahead of — it requires a file. Here's what to have on hand for every carrier you're appointed with:
- The carrier's written compensation structure for the upcoming plan year, received by October 1, showing both initial and renewal amounts.
- Confirmation that every agent being paid under that structure is currently licensed in the relevant state and appointed with that carrier.
- This year's completed annual training and testing record for each agent, showing an 85 percent or higher score.
- A record of any referral fee arrangements, with the amount disclosed and checked against the current $100 (MA/MA-PD) or $25 (PDP) cap.
- A monthly review of chargebacks that separates true rapid disenrollments (within three months) from mid-year proration recoveries, so the two don't get lumped together as "one bad month."
- For any enrollment that didn't run the full calendar year, a quick math check against the carrier's recovery: months not enrolled, divided by twelve, times the compensation paid.
Most of that documentation sits with the carrier or your FMO rather than being something you generate yourself — your job is making sure it exists on your side of the file, not just theirs.
How AgencyView Fits Into This
AgencyView doesn't set or report your compensation rates — that's between you, your carriers, and CMS. What it does is keep your own records matched to what actually happened. Through the ComTrack partnership, every paid commission is matched to the client it belongs to, and AgencyView raises an alert the moment a chargeback lands rather than leaving it buried in a net statement total. The CFO Center turns that same data into a dedicated chargeback-exposure report, so a mid-year proration recovery shows up next to the rapid-disenrollment clawbacks instead of disappearing into a single commissions number. See insurance commission tracking software for how the matching and alerts work.
Frequently Asked Questions
Is the compensation disclosure the same thing as the TPMO disclaimer?
No. The TPMO disclaimer is something you say or display to the beneficiary during marketing and sales activity. The compensation disclosure covered here is the carrier's written compensation structure, given to the agent, not the beneficiary. AgencyView's TPMO disclaimer guide covers the beneficiary-facing requirement separately.
What happens if a client disenrolls within three months of enrolling?
That's a rapid disenrollment under 42 CFR § 422.2274(d)(5), and the carrier must recover the full compensation paid for that enrollment, unless one of the specific exceptions applies (death, move out of service area, non-payment of premium, and a few others).
What if a client disenrolls later in the year, outside that three-month window?
The carrier still recovers compensation, but prorated: the amount recovered is based on how many of the twelve calendar-year months the client wasn't actually enrolled, not a full clawback.
What's the referral fee cap for Medicare leads right now?
$100 for a referral into a Medicare Advantage or MA-PD plan, and $25 for a referral into a standalone Part D plan, under 42 CFR § 422.2274(f). Any referral fee paid has to be disclosed.
Do agents have to pass a specific score on annual Medicare training?
Yes — 85 percent or higher on all forms of annual training and testing, per 42 CFR § 422.2274(b)(2), confirmed again in CMS's current-year training and testing guidelines.
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