With 50% of our agents retiring in the next 6 years, we have a lot of inquiries about pricing blocks of Medicare business.
The short story is 1 – 1.5x: this is the number used to value renewals.
Medicare Supplements are easier to value because they pay level for 6 years in most states and most people who buy them, keep them. Every year some of your renewals are falling off; whereas Medicare Advantage and Part D renewals are lifetime.
Banks have a terrible track record of understanding the valuations of health and Medicare agencies. The market pays 1x almost universally across the nation.
How much is your block worth?
Take your renewals x 1 and that is the top amount the market will pay but you earn less if:
- You don’t have complete files on your clients.
- Your MAPD business is not with a major carrier. Regional plans are all built to sell and plans can exit at any time.
- Your Medicare Supplement business is with a small, regional carrier. These types of carriers have a poor history of maintaining their rates.
- Your Medicare Supplement business was sold by agents under you who no longer with you and there is not a non-compete agreement barring those agents from contacting the clients you are attempting to sell, or you are in a state that does not enforce non-compete agreements.
- What are your plans? If you want to retire and terminate your license, that is more valuable than an agent who wants to continue to sell and potentially compete with the purchaser.