Best Practices Regarding Referral Fees

May 8th, 2025

1 min read

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As an insurance agent, referrals are one of the most powerful tools for growing your book of business—but they come with strict compliance rules. This quick guide breaks down what you can and cannot do when it comes to referral fees, so you can grow your network without putting your license at risk.

What Is a Referral Fee?

A referral fee is any kind of compensation—cash, gifts, or anything of value—given to an individual or entity for referring potential clients. The key factor is whether the person or group being paid is licensed to sell insurance.

Referral Fee Best Practices for Agents

✅ What You CAN Do

Give nominal gifts to beneficiaries (non-cash, $15 max per gift, $75 annually per person).
Receive referrals from:
- Licensed agents and agencies.
- Healthcare providers, as long as they are compliant with Medicare guidelines.
- Licensed MA organizations (referral fees capped at $100 for MAPD and $25 for PDP in 2025).
Pay referral fees to other licensed agents or agencies (check your state’s rules first).
Keep records of referral sources and obtain proper authorization before contacting referred individuals.

❌ What You CANNOT Do

Pay or offer referral fees to providers (doctors, clinics, etc.).
Pay consumers for referring friends or family (this is considered rebating and is prohibited).
Give cash or monetary gifts to beneficiaries for any reason.
Use provider-supplied patient lists without written consent.

What Is Rebating?

Rebating is when an agent offers part of their commission—or other inducements—to a client in exchange for purchasing a policy. This is illegal in most states and can result in fines, loss of license, or other regulatory actions.

Remember: Even something as simple as a gift card can be considered rebating if it’s tied to a sale or referral from a consumer.

Referral Fees from Medicare Advantage Carriers

Agents can receive referral fees from MA organizations for referring beneficiaries, but there are limits:

$100 for Medicare Advantage (MAPD/MA) referrals
$25 for standalone Part D (PDP) referrals
These caps are set for 2025 and are subject to change.

Stay Safe: When in Doubt, Don’t Pay Out

Referral fees can be a great incentive tool—but only when used correctly and within compliance guidelines. Focus on building relationships with licensed professionals and always check state-specific rules before offering or accepting referral compensation.

👉 Helpful Resource: Medicare Communications and Marketing Guidelines (MCMG)

Need help setting up compliant marketing or lead generation strategies? Let’s talk. We specialize in helping agents stay compliant and competitive.

➡️ Compliance Resources for agents

Topics:

Medicare Advantage plans

Medicare Sales

CMS

medicare marketing guidelines

Compliance

2025

Referral Fees