What are the Medicare Gift Rules?

Offering promotional freebies and gifts is a proven marketing tool for selling insurance. But what are the Medicare gift rules?
what are the medicare gift rules
14 Apr 2021

What are the Medicare Gift Rules?

Giving a “free gift with purchase” is a very old, very successful sales tactic. But can you employ marketing like this with Medicare beneficiaries? What are the Medicare gift rules? Attracting customers using promotional giveaways and other freebies can be a risky proposition when you’re selling healthcare plans to people over 65.

Incentivizing beneficiaries to sign up for one of your plans by offering a gift is heavily regulated by The Centers for Medicare and Medicaid Services (CMS). And rightfully so! With so many seniors living on a fixed income and financially vulnerable, combining Medicare enrollment and promotional freebies could be an easy way to take advantage of older Americans.

But insurance brokers are known for giving away promotional products, knickknacks and other novelties to keep their businesses top-of-mind for consumers! Thankfully, CMS rules doesn’t outright prohibit—only limits—giveaways. To learn more about what you can and can’t do, we’ve summarized the five rules you must follow when offering gifts to Medicare beneficiaries.

Rule #1: $15 or less

Whether it’s a travel mug with your logo on it or a pack of golf balls shaped like your face, any promotional item you give can’t be worth more than $15. So what if you offer gift items several times throughout the year? That’s fine, but when you add all the gifts together, you can’t exceed $75 per recipient.

If you spend $15 on each gift you offer, you can only give five gifts throughout the year. Spend $5 per gift, and you can offer 15 gifts a year. And don’t think saving up the $75 limit for a nice Christmas gift basket at the end of the year is the answer! 

Of course, the $75 rule is per person. So keep track of which customer gets what and make sure that no one person receives an item worth more than $15 or $75 in gifts per year total.

Rule #2: Cash isn’t welcome here

If promotional gifts aren’t your style, resist the urge to offer cash to your clients. Giving someone $10 for a referral or enrolling in a specific plan may sound like a good idea, but CMS expressly prohibits giving cash or cash equivalents, like a check.

Fortunately, gift cards are a great alternative!

Rule #3: Gift cards are okay (with limits!)

You can offer gift cards to beneficiaries. But don’t forget rule #1! The gift card’s value can’t be more than $15 per card, per person, or $75 cumulatively per person, for the year. And for gift card options think local coffee shops or restaurants, gas stations and grocery stores. Gift cards to “big-box” stores aren’t allowed.

In December 2020, the Department of Health and Human Services’ Office of Inspector General released Advisory Opinion No. 20-08. This opinion decided gift cards from big-box stores like Target and Wal-Mart are too close to “cash equivalents.” While big-box store gift cards might have been more convenient, this is actually a great chance to support your local businesses!

Rule #4: Equal-opportunity gifting

No matter what you’re giving away or what the cost is, you have to offer the giveaway to everyone. Yes! This even includes seniors who aren’t using your products or services. Offer gifts to all seniors to publicize your name in the marketplace, not to convince beneficiaries to sit down for a consultation or buy specific Medicare plans.

Rule #5: Only snacks allowed!

CMS prohibits insurance professionals from offering meals to beneficiaries. Light snacks and drinks are allowed, as long as when you consider the snacks as a whole, you don’t have a meal. If you have an event, and people are still hungry when they leave, you’re well within the law!

Promotional gifts are clearly an effective and successful tool for gaining and retaining clients. If you have more questions about the rules governing giveaways, contact us today to learn more!

image credit: shutterstock/Anton27