The Value of Plan Alignment
Medicare Advantage has a fit problem, and everyone is paying for it.
The problem: a market priced at the sale
A Medicare Advantage enrollment pays in two phases: an initial commission in the first year (capped at $725 nationally for 2027) and a renewal each year the member stays (capped at $363). For the carrier, each retained member-year contributes margin. Yet the market prices nearly everything at the sale: cost per lead, conversion rate, cost per acquisition.
When members leave quickly, everyone loses. In 2021, one public Medicare broker reported its lifetime value per approved MA member fell as churn reached about 40% a year. In 2022, another recorded a $145 million downward adjustment in a single quarter, tied to higher lapse rates. In Medicare distribution, lifetime value rises and falls with retention, not with acquisition cost.
And 2027 raises the stakes: at least 11 insurers are leaving Medicare Advantage, 181 counties will have no MA plan, and about 4.3 million beneficiaries, including about 3.1 million in MA plans, must choose again.
The fix: plan alignment, plan before agent
Plan alignment uses a consumer’s own information (medications, preferred providers, location and expected care) with an actuarial model to rank every plan available to them by expected total out-of-pocket cost. The consumer and the agent start the conversation already knowing which plans fit and why.
Value per aligned enrollment
| Who | Where the value comes from | Value |
|---|---|---|
| Consumer | Lower out-of-pocket costs in a plan that fits their drugs, doctors and care | ~$691 a year (~$2,250 over the expected stay) |
| Lead marketer | A premium on each plan-aligned lead, paid out of the buyer’s gain | a share of $12–$96 per lead |
| Agent | Higher close rates, shorter conversations, more renewals kept | $236–$321 |
| FMO | Own revenue on downline production, plus agents’ gains | $38–$158 own; $274–$479 system |
| Carrier | Members matched to its plans who stay longer | $170–$244 |
Why it pays after the sale
Starting from 35% annual churn for lead-originated MA members, and assuming aligned members leave voluntarily 20% less often (a 15% cut in total churn, below the published evidence), each enrollee stays about 16% longer. From retention alone, distribution can pay about $135 more per enrollment for a plan-aligned acquisition and still come out ahead.
| Scenario | Annual churn | Member-years | Gain | Commission value |
|---|---|---|---|---|
| Standard enrollment | 35.0% | 2.82 | — | — |
| Aligned, conservative | 31.5% | 3.10 | +10% | +$88 |
| Aligned, base | 29.75% | 3.26 | +16% | +$137 |
| Aligned, optimistic | 26.25% | 3.63 | +29% | +$249 |
Ten-year horizon; dollar values in present value at a net 4% discount.
The evidence
The estimates are built from the closest published evidence: markets where people were matched to a product on their own terms rather than sold by an incentivized seller. Personalized Part D cost letters raised switching from 17% to 28% and lowered expected costs (Kling et al., 2012). Customers arriving with better fit information churned about 18% less in bank and telecom studies. And in Milliman’s study of 81,597 MA members, 90% would have spent less in the plan recommended for them. Our companion paper, There’s No Going Back, shows the same pattern across five other markets.
What it all adds up to
- The market’s biggest leak is a fit problem, not a price problem.
- Fixing fit at the start costs far less than paying for misfit later.
- Plan-aligned acquisition can cost more and still win.
- Compliance becomes a byproduct, not a burden.
- With about 4.3 million beneficiaries forced to choose for 2027, the window is now.
Get every number, source and assumption
The full paper includes the retention model, value by party, the evidence table with grades, objections and answers, and a measurement plan you can start now. You’ll get Part 1 as well.