A Medicare Advantage agent can collect up to $725 for signing you up and $363 for each year you stay. Steer you to Original Medicare and the program pays the agent $0. That gap is the figure that matters as open enrollment runs from October 15 through December 7, 2026.
Retirees will spend the coming weeks at kitchen tables with licensed agents who know the plans cold. How the agent gets paid rarely comes up. Neither number appears on your enrollment form.
What the caps allow
Federal rules set an annual maximum that insurers may pay an agent, called the fair market value cap. For contract year 2027 the national cap is $725 for an initial Medicare Advantage enrollment and $363 for each renewal year. Several states and territories carry higher caps. These are ceilings, and a plan may pay less.
Stand-alone prescription drug plans pay far less: $130 for an initial enrollment and $65 on renewal. Referral fees run on separate caps of $100 for Medicare Advantage and $25 for drug plans. An Advantage sale sits at the top of that scale.
Many independent agents also represent several carriers at once, so the plans you are shown depend on which contracts the agent holds. Someone with only a few carrier contracts can only show you those carriers’ plans.
What Medicare Advantage is
Medicare Advantage, or Part C, is run by private companies under the Social Security Act of 1965 that created Medicare. By 1985, rules under the Tax Equity and Fiscal Responsibility Act of 1982 had set up risk-contract HMOs paid a monthly amount per enrollee instead of fee-for-service. Enrollment has since grown from 24 percent of beneficiaries in 2010 to 49 percent, or 33 million people, in 2024.
Under Part C, Medicare pays the plan operator a fixed amount per enrollee, and the operator covers medical costs. Traditional Medicare pays providers directly for each service. Operators include health insurers, labor unions, nonprofit charities and integrated health systems, and some limit enrollment to particular groups.
Leaving is not always easy
Switching back to Original Medicare can be costly. In most states, insurers can deny or overcharge for Medigap coverage based on your health history.
Staying put is no safe option either. Some insurers are shutting down Medicare Advantage plans, especially in rural areas. For 2027, more than 40 states will lose some plans, and nearly 200 counties, mostly rural, will have none. Kelli Jo Greiner runs a state agency that operates a Medicare hotline in Minnesota. She called the last enrollment season “total chaos,” with two-hour waits. Callers who got through often found the surviving plans had higher monthly premiums and covered less.
Questions to ask
Ask any agent whether their pay changes if you choose Original Medicare. For a free, unbiased review, every state has a counselor through the federally funded SHIP program, reachable at shiphelp.org.
Sources
- The Agent Who Enrolls You in Advantage Can Earn Hundreds the First Year and More if You Stay. Moving You to Original Medicare Alone Will Pay Him Nothing
- Medicare Advantage
- Medicare Advantage plans are shutting down, leaving millions without coverage
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