A New York producer persuades a Medicare beneficiary to replace an existing Medicare supplement policy with a new Medicare supplement policy issued by a different issuer. Under New York's permitted compensation arrangements for Medicare supplement insurance, the compensation the producer may receive for the replacement:
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Under the permitted compensation arrangements for Medicare supplement insurance in New York, when an existing Medicare supplement policy or certificate, Medicare select coverage, or a Medicare Advantage plan is replaced by a Medicare supplement policy, neither the issuer nor the producer may provide or receive compensation greater than the renewal compensation payable by the replacing issuer on renewal policies. The rule strips out the enhanced commission that would otherwise reward producers for churning seniors' coverage, so a replacement pays at most renewal-level compensation.
Why the other options are wrong
- A) A replacement is not treated like a fresh year-of-sale commission event; the rules cap replacement compensation at the renewal level.
- B) Compensation on replacements is not unrestricted; the renewal-compensation ceiling applies precisely to replacement transactions.
- D) Disclosure to the applicant does not authorize a replacement bonus; compensation above the renewal level is prohibited regardless of disclosure.
Memory hook
Replace a Medigap policy = producer earns renewal-level pay, not first-year pay.