The headline has a certain click-bait feel, but it is true. Non-resident appointment fees can be a waste of your agencies precious capital. Read this, I guarantee you don’t understand this topic!
Here are the steps to take to avoid wasting $6,000 like Natalie’s agency did this year. She is an actual agent, who asked that she be given credit for this blog post, but still remain anonymous because she is )(#$*@})#*@)($& that she lost the money by not fully understanding how appointment fees work.
Don’t want to read the rest of this blog?
Watch this video instead.
1st – Know the actual fees. This sounds simple, here is a chart of the State Non Resident Appointment Fees for 2018. In the hustle of running a growing agency, she didn’t realize that the states charge the fees, not the carriers. The carriers just pass it along to the agents AND the chart can be very misleading because of multiple entities.
<<For a painful example, the state of Alabama charges $40>>
BUT WAIT! if you are appointed with a carrier with multiple corporate entities, you must multiply that $40 x the number of entities. For example, United Healthcare has 5 entities in Alabama (United Healthcare Insurance Company, Care Improvement Plus United Healthcare of Alabama, United Healthcare of the Midlands and Symphonix Health), non residents must pay $200 to be appointed with all. You can’t pick and choose, it is all or nothing. See UHC’s Appointment Fee Chart Here. Yep. What looks like $40 is really $200 for UHC in AL; FL looks like $60 but is $240. CT looks like $100 but is $300. Anthem charges a small transaction fee ($1.53) in some states. See Anthem’s Appointment Fee Chart Here. The difficult state is Georgia where Anthem has three entities. Agents are infuriated that Georgia only charges $10, but Anthem charges $49.11. No, Anthem is not making money off this. Collecting and submitting appointment fees to the states is a money loser for all carriers (which is why Anthem is charging a very small transaction fee). *Carriers keep buying other carriers, which can make amounts go up. *Not all carriers charge appointment fees, some pay it to make them more attractive to agents to start working with a new company. Typically new and small carriers.
What are “multiple entities?”
When carriers buy other carriers you must be appointed with all their entities that have folded under the parent carrier. The largest Medicare Advantage companies have all acquired other companies and while you may only sell one of their brands, you are contractually able to sell all their brands, hence the multiple appointment fees.
2nd – Don’t appoint multiple agents in a state unless you do enough business to justify the annual fees. Have one agent appointed on the west coast, another on the east coast and invest in multiple agents in the states where your business is concentrated.
3rd – Don’t hesitate to terminate the appointments of your LOA/Solicitor agents who leave your agency. This will not jeopardize your renewals as long as the principal agent is licensed, certified and appointed in those non resident states where the agent sold business.
4th – Calendar this topic with yourself or your staff to review it annually. We are all busy and most of us don’t notice until the fees have been deducted from our paychecks. IT IS TOO LATE AT THAT POINT. There is no way to reverse the charge, you must be proactive. Go into your agency portal and see who is appointed and where. Cross reference with the fee charts, and see if the money makes sense–before you lose thousands of dollars to unnecessary fees.
5th – Don’t assume one carrier acts like other carriers. They all have different rules, so this takes some research based on your state and company focus. Keep in mind that FREE states (that don’t charge an appointment fee) like AR, AZ, IN, IL, MO may start charging a fee at any time. Check each year and adjust your marketing plan.
6th – Get some key referral relationships. You are going to get prospects in other states. Your clients are going to move and ask you for help finding a new plan. We have a referral department at Gordon Marketing. Earn $100 per MAPD, $25 per PDP (the CMS allowed max) and $150 per Medicare Supplement. It may make more financial sense to refer out and collect the referral fees than pay for the non resident agent fees. Call us at Gordon Marketing 800-388-8342 when this blog post brings up more questions than it answers. I didn’t go into the topic of non resident license fees and the oh-so-crazy concept of retaliatory fees.