EP9 Who's Protecting Your Commission?

In this episode of The Insurance Producers Guild, we unpack a growing shift in regulatory enforcement that directly impacts insurance agents — especially those in the Medicare Advantage and MedSupp space.

Six state insurance departments have issued formal enforcement notices against carriers for practices that undermine agent compensation, including removing enrollment applications from websites, discouraging producers from selling, and changing compensation mid-year. Idaho went further by issuing cease-and-desist letters to two carriers.

This episode breaks down the real exposure agents face — not from major mistakes, but from small operational gaps like undocumented conversations, AI tools that miss exclusions, and scope creep created by informal advice.

Finally, we walk through the three CMS rules that generate the most agent violations: Scope of Appointment requirements, full call recording obligations, and TPMO disclaimer rules — all of which carry strict retention and execution standards.

🔑 Key Topics Covered

•  State-level enforcement actions against Medicare Advantage and MedSupp carriers 
•  Commission protection versus carrier compensation flexibility 
•  Regulatory analysis from Epstein Becker & Green 
•  CMS guidance on compensation and fair market value 
•  Rising E&O claim severity and the role of AI/documentation gaps 
•  Top operational liability triggers for agents 
•  Scope of Appointment compliance requirements 
•  Call recording retention and execution rules 
•  TPMO disclaimer requirements in written and verbal communications 

🎯 What This Means for Agents

• Stability likely continues in many markets
• Compliance matters more than ever
• Clear client education is critical
• $0 plans remain, but positioning is key
• Knowledge = confidence in sales conversations

👉 GO-DO

Pull up your E&O policy this week and verify two things:
 (1) your per-claim limit is at least $1 million, and
(2) you know what is excluded.

Then send one documentation email after your next client interaction using this format:

“Here is what we discussed, here is what I am doing, here is what I am not doing.”

Infographic: https://www.psmbrokerage.com/hubfs/The%20Insurance%20Producers%20Guild/IPG_EP9_Infographic.png

Slides: https://www.psmbrokerage.com/hubfs/The%20Insurance%20Producers%20Guild/IPG_EP9_Slides.pdf

The Insurance Producers Guild Podcast delivers intelligence for insurance agents looking to stay ahead of industry trends.

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Learn more: https://www.psmbrokerage.com

Transcript

SPEAKER_00 0:16

You know, six states just issued formal enforcement notices right across the Medicare market. And well, I know your first instinct as an agent is to panic when regulators get active. You hear the words enforcement notice and you immediately start checking your own files.

SPEAKER_01 0:30

Oh, absolutely. But uh this is actually fantastic news.

SPEAKER_00 0:33

Right? It really is.

SPEAKER_01 0:35

Because those regulators, they are not targeting you at all. They are stepping in to protect your compensation. I have been through these market cycles before. You know, over the last 25 years, I have seen these ships.

SPEAKER_00 0:47

Yeah, you have definitely seen the patterns.

SPEAKER_01 0:49

Exactly. And these state actions are fundamentally about improving the industry. It is about ensuring fair practices for the agents doing the hard work on the ground.

SPEAKER_00 0:59

So our mission today is to show you how to build an absolute fortress around your commissions. We are looking at Notebook C from The Guardian today, along with a legal report from Epstein, Becker, and Green. We also have the 2026 claims data from the National Association of Plan Advisors.

SPEAKER_01 1:16

It is a lot of really crucial data.

SPEAKER_00 1:18

It is. And we will break down exactly how this regulatory shift protects your book of business, your clients, and your revenue. Plus, I'm going to give you the exact word-for-word scripts to handle today's specific risks so you can monetize these changes instead of hiding from them.

SPEAKER_01 1:35

That concept of control is really the perfect place to start. Because to protect your income, well, you have to understand the ground rules we are operating under right now. The Epstein, Becker, and Green report maps this out perfectly.

SPEAKER_00 1:47

Okay, what are they seeing?

SPEAKER_01 1:48

Six state insurance departments. So we are talking about Delaware, Idaho, Montana, New Hampshire, North Dakota, and Oklahoma. They have all issued formal statements about Medicare Advantage and Medsup market practices.

SPEAKER_00 2:02

Right, the enforcement notices.

SPEAKER_01 2:03

Exactly. They are looking closely at situations where, you know, enrollment applications suddenly vanish from websites, or instances where sales are actively discouraged by making the process incredibly difficult.

SPEAKER_00 2:15

Yeah. Or where compensation structures are just altered right in the middle of the year. Let us unpack why that mid-year shift happens in the first place. Because that is what really hurts the independent producer. Right. Imagine you have a carrier that realizes a particular demographic or say a specific county is running too hot on claims.

SPEAKER_01 2:35

They want to shed that risk.

SPEAKER_00 2:37

Exactly. They're trying to manage their risk pools, which, you know, makes sense for their business. But instead of just waiting for the next annual enrollment period, they decide to make the application impossible to find. Or they slash the commission to zero to disincentivize you from writing the business.

SPEAKER_01 2:53

Yeah, it is a financial rebalancing move.

SPEAKER_00 2:56

Right. But doing it abruptly disrupts the market.

SPEAKER_01 2:59

It does. And the states are stepping up and saying that doing this abruptly and without transparency, it harms the consumer who genuinely needs that coverage. And it absolutely punishes the agent who spent time providing the counsel. Trevor Burrus, Jr.

SPEAKER_00 3:11

Which is why the states are getting involved.

SPEAKER_01 3:13

Right. They are drawing a line in the sand to standardize the process to improve the industry for everyone. Idaho even went as far as issuing cease and desist letters to two carriers recently.

SPEAKER_00 3:24

Well, a full cease and desist.

SPEAKER_01 3:26

Yes. And Oklahoma applied its interpretation beyond Medicare to all health plans in the state. They are signaling that manipulating compensation is an unfair trade practice.

SPEAKER_00 3:37

And uh CMS actually confirmed that states have primary oversight of Medigap coverage sales and commissions. That is a crucial detail. It means the states actually have the teeth to enforce this at a local level.

SPEAKER_01 3:50

Aaron Powell They do. Technically, federal Medicare law preempts state regulation except for licensure insolvency. Okay. But CMS rarely challenges state enforcement near that line, especially when consumer harm is involved. Carriers can set compensation anywhere from zero to the maximum fair market value determined by CMS. Right. But they cannot use deceptive mid-year practices. The states are setting boundaries to make sure the business you write today pays you what you were promised tomorrow.

SPEAKER_00 4:16

Okay, wait. I have a direct question on that though. If CMS only determines maximum fair market value, how does an agent actually use this state level enforcement to their advantage? Like when a commission issue actually arises out in the field.

SPEAKER_01 4:30

Well, it gives you a foundation. You are not just negotiating, you have regulatory backing now.

SPEAKER_00 4:35

Exactly. So here is what you do on the ground. If you face these roadblocks, you do not just accept the loss, you have a specific, targeted response. You tell the carrier, file a complaint. You have leverage now. That changes the whole conversation. It really does. You remind the parties involved that state departments of insurance are actively watching for these exact practices and issuing enforcement notices.

SPEAKER_01 4:58

You are referencing active, documented, regulatory enforcement. It shows you understand your rights under state enforcement notices. They realize they are dealing with a professional.

SPEAKER_00 5:07

And you know, this is exactly why being aligned with the right partners matters. The compliance team at PSM Brokerage tracks these specific state actions to keep our agents informed and protected. You use that intelligence to defend your revenue.

SPEAKER_01 5:20

Well, securing your commission from external changes is really only step one. We just talked about external forces taking money out of your pocket, but the irony is the biggest threat to your revenue right now might actually be sitting on your own laptop.

SPEAKER_00 5:33

Right. The internal mistakes.

SPEAKER_01 5:34

Yes. You have to protect that commission from yourself, essentially. That is where the 2026 report from the National Association of Plan Advisors comes in.

SPEAKER_00 5:43

The ENO claims data.

SPEAKER_01 5:45

Exactly. The numbers are sobering. Errors and omissions claims in the$5 million to$20 million limit range. Well, they are growing at a 14.9% compound annual growth rate.

SPEAKER_00 5:57

Wow. Almost 15% year over year.

SPEAKER_01 5:59

It is a massive jump. And the pattern is clear. Convenience is creating liability.

SPEAKER_00 6:04

Yes. Speed is becoming a trap.

SPEAKER_01 6:06

The report notes that 85% of carriers cite rising claim severity specifically from AI usage.

SPEAKER_00 6:13

Let us break down how that actually happens. Imagine you're relying on a new AI software tool to spit out a quote rapidly for a client. The AI scans a massive 150-page policy document in seconds.

SPEAKER_01 6:25

Which is great for speed.

SPEAKER_00 6:26

Right. But it misses a subtle health exclusion in the underwriting guidelines. Let us say it misses a specific waiting period for a pre-existing heart condition. You take the AI at its word, present the quote, and bind the policy.

SPEAKER_01 6:42

And then the claim gets denied later.

SPEAKER_00 6:44

Exactly. Six months later, the client has a major medical event. The claim is denied because of that exact exclusion the AI missed. The client does not sue the AI company. They sue you for misrepresentation.

SPEAKER_01 6:57

We are seeing six-figure lawsuits stemming from one algorithmic blind spot.

SPEAKER_00 7:01

But I have to push back on the AI point, though. If I am an agent trying to scale my book of business, how am I supposed to stay competitive and move fast if I have to manually double check every single algorithm recommendation?

SPEAKER_01 7:12

I know.

SPEAKER_00 7:13

I mean, if I stop to audit the machine every single time, I lose my speed advantage entirely.

SPEAKER_01 7:16

I completely understand that friction. But uh think of using an AI quoting tool like driving a sports car on ice. The faster you go without traction, the harder you crash. The traction in this scenario is your documentation and your professional verification. You use the tool for speed to narrow down the options, but you secure the transaction with manual verification of the key exclusions.

SPEAKER_00 7:38

So you still have to be the expert in the room.

SPEAKER_01 7:39

Yes. NAPPA explicitly recommends confirming AI recommendations in writing. You are the licensed professional legally responsible for the accuracy.

SPEAKER_00 7:48

Okay, that makes sense. And the second and third massive triggers for EO claims are simple documentation gaps and scope creep. The NAPA report cited a recent case where a broker failed to document a policy change in a client file. Trevor Burrus, Jr.

SPEAKER_01 8:02

Just a simple verbal conversation, right?

SPEAKER_00 8:04

Yeah. The agent verbally told the client about a change in their deductible, but never wrote it down. That single omission led to a settlement of over$250,000.

SPEAKER_01 8:12

Aaron Powell And people wonder why an agent settles for$250,000 instead of fighting it in court. It is because the cost of legal defense can easily exceed the settlement amount. If you have no documentation, it is your word against the client's memory.

SPEAKER_00 8:25

And judges heavily favor the consumer.

SPEAKER_01 8:27

Absolutely. And then you have scope creep. These are those informal coverage discussions over coffee without a signed application. It feels like good customer service until a loss occurs and the client claims you advise them differently.

SPEAKER_00 8:41

So here is your word-for-word solution for those documentation gaps and that scope creep. You finish a call and you send one email. It takes exactly 30 seconds.

SPEAKER_01 8:50

It is so simple, but it works.

SPEAKER_00 8:51

You write, here is what we discussed, what I am doing and what I am not doing. That is it.

SPEAKER_01 8:56

That is brilliant because it clearly defines the boundaries of your professional liability.

SPEAKER_00 9:01

Exactly. If it does not in the email, it simply did not happen. You eliminate the gray area completely.

SPEAKER_01 9:06

And to back that up structurally, NAPA recommends carrying$1 million per claim and$3 million in aggregate ENO coverage. For an agent with a clean record, that only costs about$75 to$145 a month.

SPEAKER_00 9:20

That is an incredibly small price for structural security. And remember, PSM brokerage agents get access to compliance resources that help formalize those exact engagement letters and define the scope so you avoid these traps entirely.

SPEAKER_01 9:32

Right. You build the defense before the claim ever happens. But avoiding a civil suit is only part of the equation. Failing to follow federal guidelines, well, that will cost you your license entirely.

SPEAKER_00 9:44

That is a total loss of your livelihood.

SPEAKER_01 9:46

Yes. So we need to look closely at the Centers for Medicare and Medicaid Services 2026 agent and broker training and testing guidelines. There are three rules generating the absolute most violations right now.

SPEAKER_00 9:58

Aaron Powell What is the first one catching people?

SPEAKER_01 10:00

First is the scope of appointment rule. You are required to collect a completed SOA at least 48 hours before any scheduled appointment. Whether that is in person or over the phone, that 48-hour clock applies.

SPEAKER_00 10:13

And you have to keep those forms for a long time, right?

SPEAKER_01 10:15

Yes, you have to retain those forms for 10 years.

SPEAKER_00 10:17

I mean a 10-year retention rule sounds excessive at first glance. Why is CMS pushing so hard on a decade of record keeping? It feels like an incredible burden.

SPEAKER_01 10:26

Well, regulators found that disputes over what was promised during an enrollment often surface years later. It usually happens when a beneficiary experiences a major health decline. They require a specific treatment and suddenly realize their coverage does not match what they thought they bought five years ago.

SPEAKER_00 10:42

Oh wow. So the 10-year rule ensures there's an objective historical record.

SPEAKER_01 10:47

Exactly. It protects the consumer, and frankly, it protects the honest agent from false accusations driven by memory lapse years down the line.

SPEAKER_00 10:55

Look, 48 hours and 10-year retention sound like an administrative nightmare. For an agent who is used to closing on the first interaction, that 48-hour wait just kills sales momentum. How do top producers integrate this without losing the client to someone else?

SPEAKER_01 11:12

You build it into the natural flow. You do not treat the 48-hour rule like a regulatory barrier that you are apologizing for. You treat it like a financial cooling-off period.

SPEAKER_00 11:21

That positions you as a professional.

SPEAKER_01 11:22

Right. You tell them the federal government requires a 48-hour review period so you can look over these options without any pressure before we make a final decision. It builds trust instantly.

SPEAKER_00 11:31

You monetize the compliance. But uh there are two more major rules from the CMS guidelines.

SPEAKER_01 11:41

Yes. Second, full call recording is mandatory for all sales, marketing, and enrollment calls. That includes web-based audio, and those audio files also must be kept for 10 years.

SPEAKER_00 11:51

10 years of audio is massive.

SPEAKER_01 11:53

It is. You need secure, compliant cloud storage. And third, the TPMO disclaimers must be read verbally within the first minute of a call and appear on all marketing materials. The penalties for missing these include immediate termination and total loss of contracting.

SPEAKER_00 12:08

So here is how you handle all of this practically. You make it a 60-second pre-appointment checklist. Before you start any pitch, you confirm three things mentally. SOA signed, recording on, disclaimer read, 60 seconds.

SPEAKER_01 12:21

That is it. You automate that habit.

SPEAKER_00 12:23

You do. And this is where your upline comes in. PSM Brokerage provides all the compliant materials and TPMO guidance you need to make this workflow completely frictionless. You just follow the checklist and get back to selling.

SPEAKER_01 12:33

Absolutely. When you step back and look at this entire landscape, the pattern is undeniable. With ENO claims intensifying and states standardizing the market, the environment is getting stricter. But the agent who diligently documents every single interaction, the one who adopts that 60 second checklist, is the one who will absolutely dominate the landscape in 2026.

SPEAKER_00 12:54

That is this episode of the Insurance Producers Guild. If you are not already with PSM Brokerage, this is the kind of compliance intelligence our agents get. Talk to us about contracting.