BULLETIN NO. 2026-03

The Oklahoma Insurance Department (OID), in response to the ongoing reduction or removal of commissions paid on Medicare Supplement and Medicare Advantage products, issues the following guidance regarding licensed insurance producers charging a reasonable consulting fee to beneficiaries and other consumers for advisory services related to the sale of these products.

Pursuant to 36 O.S. § 1435.2(6), an Insurance Consultant is “an individual or legal entity who is required to be licensed as an insurance producer under the laws of this state and, for a fee, is held out to the public as engaged in the business of offering any advice, counsel, opinion or service with respect to the benefits, advantages, or disadvantages promised under any policy of insurance that could be issued or delivered in this state.”

CMS has recently indicated that the prohibition on brokers charging marketing consulting fees at 42 CFR § 422.2274(c)(8) “applies specifically to agents and brokers used by MA organizations to sell an MA plan or plans, licensed and appointed for that purpose…” and that Consultant’s fees that are charged outside of that scope and/or outside of representing an MA plan may not be subject to the prohibition.¹

A conflict of interest arises when a broker is hired to work for both the benefit of the consumer and the MA plan. Pursuant to 36 O.S. § 1435.3(A), a “producer who solicits or negotiates an application for insurance of any kind shall, in any controversy between the insured or the insured’s beneficiary and the insurer, be regarded as representing the insurer and not the insured or the insured’s beneficiary.”  Hence, a producer may only act on behalf of the MA plan or the beneficiary (the insured). Producers may only do one of the following: (1) charge a beneficiary a consulting fee acting independently of the MA plan, or (2) receive a sales commission from an MA plan, a shared commission, or remuneration of any kind for the sale of an MA plan. A producer may not receive both streams of income in relation to the same transaction.

Consultants, as opposed to insurance producers, charge a reasonable fee for their advice with respect to benefits, advantages, or disadvantages promised under insurance policies, rather than directly or indirectly obtaining a commission from a company.  The term “reasonable fee” is generally defined as a fair, justifiable, and market-appropriate amount paid for services or goods.  It is generally defined as what a prudent person would expect to pay under similar circumstances and is proportional to the cost of providing the service.  Under all circumstances, the fee must be understood and agreed to between the parties engaged in the arrangement before any service or transaction is conducted.

CMS’s recent communication to Nebraska seems to indicate that the use of Consultants (who are not used by MA organizations to sell an MA plan and who are not appointed for that purpose) falls under the authority of state law. Therefore, the Oklahoma Department of Insurance will not disallow the use of Consultants so long as, with regard to each specific instance of consulting:

1. The Consultant is not:

a. selling, soliciting, or negotiating an insurance contract on behalf of an MA plan,

b. considered a fiduciary for the MA plan and/or MA organization; and/or

c. receiving a sales commission, shared commission, or remuneration of any kind for the sale of an MA plan, whether directly or indirectly through another party or parties.

2. The MA rules surrounding the sale of the product are followed*; and

3. The fee imposed is reasonable.

*All federal and state regulatory requirements, including but not limited to federal regulations involving marketing and sales, must be observed by the licensed producer in relation to the consultation service provided to a beneficiary or consumer in the process of understanding their coverage options or making enrollment decisions.

This guidance is effective upon the issue date of this notice.