Looking for a health insurance business plan? You're in the right place.
An agency that sells health and Medicare plans is paid by carriers, once a policy takes effect, and most of its selling happens in a few weeks each autumn. A lender or an investor will ask when the first real income arrives, how long the founder can last without it and what the renewal book is worth.
In this article we'll walk through a complete sample business plan for an independent health and Medicare agency in Denver, Colorado, section by section. We'll cover the executive summary, the SWOT analysis and, in particular, all of the financials.
Here's what you'll take away:
- The executive summary: put a commission business on one page, including the year in which it loses money
- The enrolment calendar: see which weeks of the year earn the revenue and which months fund the wait
- The start-up budget: work out how large a reserve an agency needs before its first annual window pays
- The renewal book: understand how policies written this year become revenue in later years, and why year two grows so much faster than year one
- The cost of winning a policy: compare marketing spend per policy with what that policy earns
- The lender's questions: see how a plan answers the ones about the founder's old clients, the loan, the investor's exit and key-person cover before they are asked
- The five-year profit, cash flow and balance sheet: follow each hire, pay and commission input into the numbers
- The downside case: have an answer ready for the "what if sales are 20% short?" question, along with the steps the owner takes in response
If you're setting up an agency that sells health or Medicare plans, read this before you write your own. The agency is fictional, so take what fits your market and change the rest.
In this plan
If you need a health insurance business plan template for your own plan, start it in the Toolkit.
The Agency in Brief
Better Life Health Insurance is an independent insurance agency that opens in southeast Denver on 1 January 2027. Once its carrier contracts are in place it sells Medicare Advantage, Medicare drug and Medigap plans, individual and family health plans, and small-group health plans for employers with a few dozen staff. It is paid by the carriers whose plans it sells, once a policy takes effect, and charges clients no fee. Founder Dana Whitfield, a licensed Colorado health and life producer, owns about 61% of the agency. A private investor owns the rest. Carrier contract applications are filed at launch, and the plan expects the first appointments to complete in March.
Opening takes $370,000. Dana puts in $190,000 of savings, the investor $120,000, and a bank adds a $60,000 term loan. Most of it, $330,500, sits in reserve to carry the agency until commissions arrive. Equipment and fit-out take $19,000, and legal fees, licensing and the launch take $20,500.
| Year 1 | Year 2 | Year 3 | |
|---|---|---|---|
| Revenue | $82,487 | $388,600 | $663,300 |
| Net income after start-up costs | ($192,356) | ($68,151) | $39,267 |
| Closing cash | $152,947 | $47,014 | $51,105 |
The first year earns little, and the cause is the way carriers pay. Policies sold in the Medicare annual window, from 15 October to 7 December, take effect on 1 January and pay the following month, so the agency works its first window in 2027 and is paid for it in 2028. Year 1 revenue starts in March, when the first appointments complete, and comes only from policies written outside the window, a few individual-plan members and the first small-group clients. Year 2 is the first year with window commission and the first with renewals, and revenue grows 371%. Year 3 is the first profitable year.
The plan also tests a bad run. With sales 20% under plan, later hires, no last senior hire, a 20% cut in Dana's pay and no distributions, cash stays above zero in all five years, though only just in Year 3.
What Better Life offers is plain. With its contracts in place it can put several carriers' plans side by side, where a carrier's own sales line shows only one. One office handles a client's Medicare plan, a spouse's individual plan and the family firm's group plan. Contact continues through the year, which is when a claim, a pharmacy change or a new doctor sends people looking for help.
About Better Life
Legal name: Better Life Health Insurance, LLC, a Colorado limited liability company. Owners: Dana Whitfield (about 61%) and one private investor, a retired agency owner (about 39%). Premises: about 800 square feet of leased office space in southeast Denver, moving to about 1,100 square feet in Year 3. Start date: 1 January 2027, ahead of the first full year of Medicare sales. Stage: pre-launch. Dana holds her resident producer licence. Carrier contract applications are filed, and Medicare sales begin in March 2027 when the first appointments complete.
Why the agency exists
To match Denver-area clients with a health or Medicare plan that covers their doctors and medicines, and to stay available after they enrol.
Targets to 2031
- Write 120 policies outside the annual window from March 2027 and sell 280 inside it, with a first-agent hire in time for the autumn.
- Reach 450 new Medicare policies taking effect in 2028, the first year with window commission, and 102 renewals.
- Reach profit after tax in 2029, the third year.
- Build a renewal book of about 1,500 policies by 2031, so that renewals are over a third of revenue.
Four commission lines
| Line | How it is paid | Year 1 share of revenue | Year 5 share of revenue |
|---|---|---|---|
| Medicare plans, new enrolments | About $600 per policy, once, by the carrier | 87% | 46% |
| Medicare plans, renewals | About $300 per policy per year while the client stays | 0% | 36% |
| Individual and family plans | About $20 per member per month | 5% | 10% |
| Small-group plans | About $2,800 a year per employer | 8% | 7% |
Licences and carrier rules
Colorado licenses health insurance producers, and each carrier appoints and contracts the agents who may sell its plans. Carriers add yearly training and testing for Medicare sales and ask for recorded sales calls under their own compliance rules. Dana rechecks the state's licensing rules and each carrier's requirements before opening and at every renewal. Premium never passes through the agency, and it takes on no underwriting risk. The carrier does both.
The Denver Health and Medicare Market
The enrolment calendar
Medicare and the individual market are sold in fixed windows, and the windows decide when the agency is busy.
| Window | Dates | What it means for the agency |
|---|---|---|
| Medicare Initial Enrollment Period | 7 months around a client's 65th birthday | The steady base: a new group of clients reaches 65 every month |
| Medicare Open Enrollment (the annual window) | 15 October to 7 December | The peak: most plan changes are made here, and take effect on 1 January |
| Medicare Advantage Open Enrollment | 1 January to 31 March, for people already in a Medicare Advantage plan | A second, smaller chance to fix a poor choice |
| Individual and family open enrollment (Connect for Health Colorado) | 1 November 2026 to 15 January 2027 for plan year 2027, with enrolment by 15 December for a 1 January start | Individual and family plan sales, with a year-end deadline for a 1 January start |
| Special enrollment | After a qualifying life event | Year-round, small volume |
The Medicare dates come from Medicare.gov. Colorado runs its own exchange, Connect for Health Colorado, and publishes its own dates, which are the ones used here Federal rules for the HealthCare.gov states can differ, and the dates can change from year to year, so the plan treats them as a yearly check. Small-group plans have no fixed selling window: employers renew on their own plan-year dates.
What agents earn
The Bureau of Labor Statistics put median pay for insurance sales agents at $62,280 in May 2025 and projects 3% employment growth for the occupation from 2025 to 2035. The Bureau adds that commission is the usual way experienced agents are paid, while agents on an employer's payroll may get salary alone, salary with commission, or salary with a bonus. Better Life's agents sit in the middle group: a base of $46,000 to $52,000, with a variable payment on what they sell.
A caution on commission rates
Carriers publish their own commission schedules, and the federal rules that govern Medicare commissions change from year to year. The plan therefore uses two round planning figures, $600 for a new Medicare policy and $300 a year for a renewal, and does not present them as carrier or government figures. The $600 reflects a mix that leans towards Medicare Advantage. Medigap and standalone drug plans usually pay less, and a blend between about $400 and $650 would be defensible. It applies no growth to either over five years. Individual-market volumes depend on federal subsidy rules that can change, so that line is kept to about a tenth of revenue.
Who else a client might call
| Alternative | What it offers | Why a client picks it | How Better Life differs by design |
|---|---|---|---|
| Carrier direct sales and captive agents | One company's plans, by phone or online | Familiar brand | Compares several carriers' plans for the same doctors and medicines |
| National call-centre brokerages | Remote, high-volume Medicare enrolment | Fast and always open | A named local agent, available all year |
| Online marketplaces and comparison sites | Plan lists with price and benefit filters | Self-service | A person who checks doctors and pharmacies and handles problems after enrolment |
| Connect for Health Colorado, the state-run exchange, and its free assisters | Enrolment help for individual and family plans | No-cost help from a public programme | Also covers Medicare and employer plans in one relationship |
| Other independent Denver agencies | Health, Medicare and group plans | Established referrals and long histories | A smaller book per agent, a fixed follow-up schedule and one point of contact |
The rows summarise what each option gives a client and where Better Life sits against it. They rank nothing. Rival Denver agencies go unnamed, since few publish volumes or terms.
Strengths, weaknesses, openings and threats
| Strengths | Weaknesses |
|---|---|
| A licensed producer with nine years of Medicare and individual-plan clients | One producer at launch, so a week away costs sales |
| Contracts planned with several carriers before the autumn window, so the agency is not tied to one company's plans | No brand yet, and no renewal book |
| Referral relationships with a CPA, an elder-law attorney and two financial planners | A first year with little revenue, funded entirely from capital |
| Opportunities | Threats |
|---|---|
| A new group of people reaches 65 every month | Carriers changing commission schedules or leaving the market |
| Referrals from lawyers, financial planners and CPAs who serve older clients | Federal rule changes to how agents are paid and how plans are marketed |
| Employers looking for a local contact for group plans | Call-centre brokerages spending heavily on leads in the autumn window |
Who Buys, and Why They Change Agents
The new Medicare client
A new Medicare client is usually 64 to 75. They have a doctor they want to keep, a handful of regular prescriptions and a letter from a carrier they do not fully understand. Many are still working at 65 and must decide whether to take Medicare now or stay on an employer plan.
How they choose now
Some enrol online without help, some call the number on a mailer and some rely on a friend or a pharmacist. The commonest failure is a plan chosen for its premium, with the client's doctor outside its network, found out in January.
What sends them to an agent
A change in medicines or doctors, a rise in the plan's cost, a first claim that went badly, or a spouse reaching 65.
Under-65 and employer clients
Individuals and families under 65 who buy their own plan, and small employers, usually 5 to 50 staff, who want a person to run renewals and answer staff questions. The same owner often appears in all three: a client's business holds the group plan, the client's parent needs a Medicare plan, and the client's adult child needs an individual plan.
What they ask about first
The doctor is in the network. The medicines are covered. They can reach a person. The agency still answers in March.
Winning and Keeping Policyholders
From first call to enrolment
A 30-minute discovery call or workshop follow-up, a plan comparison based on the client's doctors, pharmacy and prescriptions, a recorded enrolment call and a check-in call after the first claim or pharmacy fill. Dana takes every discovery call until the first agent joins. Her first Medicare policy takes effect in March.
Where the first 400 policies come from
400 Medicare policies sold: 120 outside the window and 280 inside it. The 280 take effect on 1 January 2028.
| Lead source | Policies sold, Year 1 | Share |
|---|---|---|
| Turning-65 mail and email | 110 | 28% |
| Website, organic and paid search | 100 | 25% |
| Community workshops | 90 | 22% |
| Referral partners (about eight CPAs, elder-law attorneys and financial planners) | 40 | 10% |
| Autumn-window mail and events | 30 | 7% |
| Existing-client referrals | 30 | 8% |
Window capacity
The annual window is about eight weeks. Each producer can write about 140 enrolments in it, or about 4 a working day, and a licensed specialist or the account manager up to 70 alongside service work. That sets the hiring schedule: a second producer by August 2027, a third by September 2028, a fourth by September 2029 and a fifth by September 2030.
| 2027 | 2028 | 2029 | 2030 | |
|---|---|---|---|---|
| Producers in the window | 2 | 3 | 4 | 5 |
| Policies sold in the window | 280 | 420 | 560 | 660 |
| Capacity, producers only | 280 | 420 | 560 | 700 |
In the downside case window sales are 20% lower and hires are later. The licensed specialist and the account manager then carry the difference, with capacity of 350 against 336 sales in 2028, 490 against 448 in 2029 and 560 against 528 in 2030.
The book over five years
The plan expects 85% of Medicare policies to remain with the agency from one year to the next. The rest move to another plan or another agent, usually during the autumn window.
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| New Medicare policies taking effect | 120 | 450 | 641 | 821 | 954 |
| Policies renewing in the year | 0 | 102 | 469 | 944 | 1,500 |
What one policy earns
A policy written in Year 1 pays about $600 in its first year. If it stays at 85% retention it pays about $813 more in renewals over the next four years, or about $1,413 in total over five. Against that, Year 1 marketing is $120 for each policy sold, and the agent's variable pay on the first-year commission is up to $84. The marketing figure is low for Medicare because the leads are referral-led, organic or from the agency's own mail. The plan buys no lead lists, and an agency that does pays far more per enrolment.
| Item | Per policy |
|---|---|
| First-year commission | $600 |
| Variable pay to the selling agent | up to $84 |
| Chargeback allowance, 4% | $24 |
| Year 1 marketing cost per policy sold | $120 |
| Expected renewals over years 2 to 5 | about $813 |
What the client pays
The agency charges clients nothing. The carrier pays the commission, and the plan costs the client the same whether or not an agent is used. That is the reason the agency has to prove its value in service, not in price.
Marketing Plan
Where the Year 1 marketing money goes
Marketing in Year 1 totals $60,000, made up of $48,000 of running spend and $12,000 of launch work paid from the opening capital. Divided by the 400 Medicare policies sold, running spend is $120 a policy and $150 with the launch work included. The budget also produces the individual-plan and small-group leads, so the true cost of a Medicare policy is lower. Leads come from referrals, workshops and organic search, with no lead lists bought, which is why the figure is low for the trade. Spend rises to $70,000 in Year 2 and $110,000 by Year 5, which keeps the cost per policy sold at about $105 to $115 as volume grows.
| Channel | Year 1 spend | What it is expected to do |
|---|---|---|
| Turning-65 mail and email | $14,000 | Reaches people in the months before their 65th birthday, about 110 policies |
| Website content and organic search | $9,000 | Guides on choosing a plan and checking doctors and pharmacies; with paid search, about 100 policies |
| Paid search | $6,000 | Searches such as "Medicare agent Denver", mostly September to December |
| Community workshops | $9,000 | Library and senior-centre talks and the follow-up calls, about 90 policies |
| Referral partner programme | $7,000 | Coffee meetings, a short guide and thank-you notes for about eight CPAs, attorneys and planners and for clients who refer; about 40 policies from partners and 30 from clients |
| Autumn-window mail and events | $3,000 | Reminders to clients and leads before 15 October, about 30 policies |
All marketing follows carrier and federal rules on how Medicare plans may be described. Dana reviews every piece before it goes out in Year 1, and the part-time compliance coordinator takes over the review in Year 3.
Dates to hit in 2027 and 2028
- January 2027: office open, carrier contract applications filed.
- March 2027: first carrier appointments live; first Medicare policies take effect.
- August 2027: first licensed agent joins and starts carrier certification.
- September 2027: contracts with at least three Medicare carriers in place and both producers certified.
- 15 October 2027: annual window opens; target 280 enrolments by 7 December.
- December 2027: 16 policies taking effect in the month, 34 individual-plan members and 6 small-group clients.
- January and February 2028: the first window commissions arrive.
How the Office Runs
The office
About 800 square feet in southeast Denver, at roughly $30 a square foot a year ($24,000 in Year 1), with five workstations, a quiet room for recorded calls and a small meeting room. The agency moves to about 1,100 square feet in Year 3.
How a policy becomes revenue
- The client enrols on a recorded call. The enrolment is submitted to the carrier.
- The policy takes effect, on the first of the next month, or on 1 January for a window enrolment.
- The carrier pays the first-year commission, on average 40 days after the policy takes effect.
- If the client cancels inside the carrier's clawback window, the carrier recovers the commission. The plan sets aside 4% of new Medicare commission for this.
- Each year the client stays, the carrier pays a renewal commission, set at half the first-year amount.
The working year
| Period | Work |
|---|---|
| January to March | Window commissions arrive; Medicare Advantage open enrollment; new-client check-ins; Marketplace deadline on 15 January |
| April to August | Turning-65 clients, workshops, referral meetings; hiring and carrier certification for the autumn |
| September | Staff certified; the plan book reviewed against next year's plan changes; client letters |
| 15 October to 7 December | Annual window; all producers on enrolment calls; service specialists on paperwork |
| December | Marketplace year-end enrolments; small-group renewals |
Software and phones
A client relationship system that tracks every client's plan, renewal date and enrolment deadline, a quoting and plan-comparison tool, a call-recording phone system and a secure document portal. Software and phone lines cost $13,000 in Year 1, climbing to $25,000 by Year 5.
Who is on payroll when
Year 1 ends with two people on payroll (Dana, and an agent from month 8). Year 2 ends with four, Year 3 with five full-time plus a part-time coordinator, and Year 5 with eight full-time plus the coordinator. Each hire follows the window: the agent joins in August or September so that they are certified before 15 October. The service specialists are licensed, so they can take enrolment follow-ups without waiting for an agent. Agents and specialists are paid hourly, with overtime in the eight-week window, because their base pay sits below Colorado's overtime-exempt salary level (secondary guides give about $57,784 for 2026; the state's order was not checked). Dana, as owner, is exempt.
Compliance
- Dana's Colorado resident producer licence, and the licence of every agent who sells.
- Carrier appointments and annual carrier training and testing for each agent who sells Medicare plans.
- Recorded sales and enrolment calls, stored under the carrier's retention rules.
- A written client-data security procedure, because the agency holds health and prescription details.
- Errors-and-omissions, general liability, cyber and workers' compensation insurance, and key-person cover on Dana, budgeted at $8,000 in Year 1.
- A written record for each client of the plans compared and the reasons for the one chosen.
Carriers and vendors
Carriers, software vendors, an outside bookkeeper and an employment lawyer on call for hiring. The carriers matter most. The agency holds contracts with several, so no single carrier leaving the market or cutting its schedule ends the business.
Who Runs It
Dana Whitfield, founder and principal agent
Dana has nine years as a licensed health and life producer at one mid-size Denver independent agency, where she was employed on salary plus commission and served a book of about 300 Medicare and individual-plan clients. That book belongs to the agency, not to her. She holds a Colorado producer licence and a degree in communications. The $190,000 she invests took nine years to save. She is leaving to run a smaller agency where she sets how clients are served.
What Dana has not done yet
Dana has not hired or managed staff, has not run an agency's finances and has limited experience of small-group underwriting. The plan covers these with an employment lawyer on call, an outside bookkeeper on a monthly retainer and the account manager hired in month 37. Small-group clients stay at 6 until she has the support.
If Dana is out
Dana writes most of the Year 1 policies, so a long absence would stop the sales line. The first agent from month 8 reduces the risk, and the agency carries key-person disability cover on Dana. The carriers' own service desks can handle urgent client problems if she is away.
Who checks the numbers
The investor, a retired agency owner, reviews the numbers every quarter and keeps no day-to-day role. For payroll and hiring questions Dana can turn to the Colorado Small Business Development Center network.
Shares and the bank's security
Dana owns about 61% of Better Life Health Insurance, LLC and the investor about 39%. The bank loan carries a personal guarantee from Dana and a covenant to deliver quarterly accounts.
What the Bank and the Investor Will Ask
Who owns Dana's existing clients? Her former agency does. Her employment agreement carries a non-solicitation clause of 12 months, and she has had it reviewed by a lawyer. The plan has no client moving because of her and none is contacted from that agency's lists. Her referral relationships with a CPA, an elder-law attorney and two financial planners are personal contacts. If the former agency challenged her, the legal cost would come from the reserve, which the $9,000-a-year professional-fees line does not cover.
Why borrow $60,000 at 10.5% while holding $152,947 at the end of Year 1? The reserve is spent: the model draws $198,053 from operations in Year 1 and $98,354 in Year 2, leaving $47,014 at the end of Year 2. The loan covers 16% of the $370,000 raised. Without it, Dana and the investor would put in $60,000 more, or the reserve would be $60,000 smaller and the end-of-Year-2 balance would be below zero. Interest is $6,300 in Year 1.
What does the investor receive, and how does the investor exit? The investor holds about 39% and receives the same share of any distribution: about $9,700 on the $25,000 paid in Year 4 and about $15,500 on the $40,000 in Year 5. That is $25,200 against $120,000 invested, so the plan does not return the investor's money within five years. The exit is a buy-out option for Dana from Year 5 at a price set by a formula on trailing renewal commission, or a sale of the book of business. The plan fixes no multiple and promises no return.
What repays the loan while debt service cover is negative? The reserve. Interest of $6,300 in Year 1 and interest plus principal of $13,521 in Year 2 are paid from the cash balance. Operating cash flow turns positive in Year 3, and debt service cover reaches 3.5x.
Can the owners take money out? Not without the bank. The loan agreement requires the lender's written consent to any distribution, which Dana asks for in Years 4 and 5. The plan pays $25,000 and $40,000 only if cash after the payment is at least one month of operating costs. At $82,296 and $176,525 it is, against about $71,000 and $86,000 a month.
What if Dana cannot work? The agency carries term life and disability cover on Dana, assigned to the bank for at least the loan amount, and professional liability cover. From month 8 a second licensed agent can sell and service her clients, and the carriers' service desks can handle urgent problems in the meantime.
Financials: Five Years of Commissions
The tables below all come from a single model that runs five years, month by month for Year 1 and by year after that. The inputs are listed first so each figure can be traced. Commission is counted on the date a policy takes effect, which means policies sold in one autumn window are paid in the following year.
Opening capital and where it goes
| Use of funds | Amount |
|---|---|
| Computers, headsets, call-recording phone system | $11,000 |
| Office furniture and fit-out | $8,000 |
| Resident producer licences, carrier appointments, first-year training and testing | $3,500 |
| Legal: entity set-up, carrier contracts, lease review | $5,000 |
| Launch: website, brand, first mailers | $12,000 |
| Cash reserve for the months before annual-window commissions arrive | $330,500 |
| Total uses | $370,000 |
| Source of funds | Amount |
|---|---|
| Dana Whitfield's savings | $190,000 |
| Private investor (retired agency owner) | $120,000 |
| Bank term loan | $60,000 |
| Total sources | $370,000 |
Dana puts in $190,000 of her own savings and a private investor, a retired agency owner, adds $120,000. That makes $310,000 of equity, 84% of the total, held about 61% and 39%. A bank lends a further $60,000 over seven years at 10.5%, with interest only for the first 12 months; the rate is a planning figure, not a quote. The $330,500 reserve is the biggest line deliberately. The agency works its first Medicare annual window in Year 1 but is not paid for those policies until January and February of Year 2, so the reserve has to cover Dana's salary, the first agent and the launch costs across 13 months of thin income. It does get spent: $198,053 goes on Year 1 operations and another $98,354 in Year 2.
What the numbers rest on
- Medicare commissions average $600 for each new enrolment, blended across Medicare Advantage, drug plans and Medigap supplements. A renewal pays $300 a policy a year, half the first-year figure, and 85% of policies are still with the agency twelve months on. Both are round planning figures, not carrier or CMS rates, since each carrier publishes its own schedule. The $600 leans towards Medicare Advantage. Medigap and standalone drug plans usually pay less, and any blend from about $400 to $650 would be defensible. At $400 the Medicare lines shrink by a third.
- No revenue arrives in January or February, because the first carrier appointments are expected to complete in March 2027. From then, 120 policies take effect outside the autumn window during Year 1, rising from 6 in March to 16 in December, for people turning 65 and for people with a special enrolment right. Another 280 are sold between 15 October and 7 December. Those start on 1 January 2028 and are paid in Year 2, after 7% drop out before the start date. Year 2 therefore carries 450 new policies, 190 written outside the window and 260 from it.
- Window sales rise from 280 in 2027 to 420, 560 and 660 in 2028, 2029 and 2030. Policies written outside the window rise from 120 to 190, 250, 300 and 340. New policies taking effect in each year number 120, 450, 641, 821 and 954. Renewals are paid on the book from earlier years: none in Year 1, then 102, 469, 944 and 1,500 policies.
- The window runs about eight weeks, roughly 38 working days. A producer can write up to 140 enrolments in it, about 4 a day at roughly 90 minutes each, and a licensed specialist or the account manager up to 70 beside service work. That covers the base case, with two, three, four and five producers in 2027 to 2030. It also covers the downside, where window sales are 20% lower but hires come later: 336 sales against capacity of 350 in 2028, 448 against 490 in 2029 and 528 against 560 in 2030.
- Individual and family plans pay a flat $20 per member per month. Members begin after the first appointments, 34 at the end of Year 1, and average about 200, 325, 417 and 500 across Years 2 to 5. Small-group clients bring in about $2,800 a year in commission each: 6 on the book at the end of Year 1, then an average of about 14, 21, 28 and 33. Both lines are kept small on purpose. Together they are 13% of Year 1 revenue and 17% of Year 5.
- The line labelled "agents' variable pay and carrier fees" is 14% of new Medicare commissions, 4% of renewals and 8% of individual and group commissions, which comes to 13% of revenue in every year. Agents also draw a base salary. Base and variable pay together bring a full-time agent close to the $62,280 median the Bureau of Labor Statistics reports for insurance sales agents (May 2025).
- On-costs add 27% to wages (15% for the part-time coordinator) for payroll taxes, health cover, Colorado paid-leave premiums, workers' compensation and a retirement match. Wages in the personnel table are the rates at launch, with 3% annual pay raises carried as a separate line from Year 2. Dana draws $72,000 from month 1, so the profit figures come after her pay.
- Base pay of $42,000 to $52,000 for agents and specialists falls under the salary level at which Colorado exempts an employee from overtime (secondary guides give about $57,784 for 2026; the state's own order was not checked). The model therefore pays them hourly and adds overtime in the autumn window: about 10 extra hours a week for eight weeks at time and a half, roughly $2,700 a head in Year 1, rising with pay. The line totals $2,700 in Year 1 for one agent and $21,000 by Year 5 for seven people. Dana, as owner, receives none.
- Carriers pay after a policy takes effect, often a month or more later, so receivables average 40 days. They also claw back commission on policies cancelled inside their recovery window, and the model sets aside 4% of new Medicare commission each year for that, from $2,900 in Year 1 to $22,900 in Year 5.
- Marketing runs $48,000 in Year 1 plus $12,000 of launch work from opening capital, and reaches $110,000 by Year 5. Over the 400 policies sold in Year 1 (120 outside the window, 280 inside) running spend works out at $120 a policy, or $150 with launch work. That is low for Medicare because the model relies on referrals, workshops, turning-65 mail and organic search, and buys no Medicare lead lists. Agencies that buy leads pay far more per enrolment. The same spend also feeds individual and group leads, so it overstates the cost of a Medicare policy.
- Premises are about 800 square feet in southeast Denver at roughly $30 a square foot a year, growing to about 1,100 square feet in Year 3. Replacement laptops and new-hire kit are budgeted yearly from Year 2. Professional fees of $9,000 to $12,000 a year pay for an outside bookkeeper, a CPA for the year-end return and an employment lawyer on call.
- Income tax uses the federal corporate rate of 21% and the Colorado corporate rate of 4.4%, with the losses of Years 1 to 3 carried forward. The model ignores the federal cap that limits carried-forward losses to 80% of taxable income, so Year 5 tax is understated, and it expenses start-up costs at once. An agency like this would normally elect S corporation status, which moves the tax onto the owners' personal returns and leaves more cash in the business; corporate rates are a cautious placeholder. Owner distributions of $25,000 and $40,000 are paid in Years 4 and 5 only.
Commission by line
| Revenue stream | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Medicare plan commissions: new enrolments | $72,000 | $270,000 | $384,600 | $492,600 | $572,400 |
| Medicare plan commissions: renewals | $0 | $30,600 | $140,700 | $283,200 | $450,000 |
| Individual and family plan commissions | $3,720 | $48,000 | $78,000 | $100,000 | $120,000 |
| Small-group (employer) commissions | $6,767 | $40,000 | $60,000 | $78,000 | $92,000 |
| Total revenue | $82,487 | $388,600 | $663,300 | $953,800 | $1,234,400 |
| Growth on prior year | – | 371% | 71% | 44% | 29% |
New Medicare enrolments make up 87% of Year 1 revenue and 46% of Year 5, while renewals go from nothing in Year 1 to 8% of Year 2, 21% of Year 3 and 36% of Year 5. Each policy pays $600 once and then about $300 a year while it stays, and that pattern shapes the whole table. Revenue jumps 371% in Year 2 because Year 1 has no window commission and no renewals and begins in March, while Year 2 collects the first of each. Individual and group lines give a steadier base, 13% of Year 1 revenue.
Month by month in Year 1
| Month | Medicare plan commissions: new enrolments | Medicare plan commissions: renewals | Individual and family plan commissions | Small-group (employer) commissions | Total revenue | EBITDA |
|---|---|---|---|---|---|---|
| Jan 2027 | $0 | $0 | $0 | $0 | $0 | ($19,482) |
| Feb 2027 | $0 | $0 | $0 | $0 | $0 | ($19,482) |
| Mar 2027 | $3,600 | $0 | $0 | $0 | $3,600 | ($16,358) |
| Apr 2027 | $5,400 | $0 | $0 | $233 | $5,633 | ($14,594) |
| May 2027 | $6,000 | $0 | $200 | $233 | $6,433 | ($13,900) |
| Jun 2027 | $6,600 | $0 | $280 | $467 | $7,347 | ($13,107) |
| Jul 2027 | $7,200 | $0 | $360 | $467 | $8,027 | ($12,517) |
| Aug 2027 | $7,800 | $0 | $440 | $700 | $8,940 | ($11,725) |
| Sep 2027 | $8,400 | $0 | $520 | $933 | $9,853 | ($10,933) |
| Oct 2027 | $8,400 | $0 | $600 | $1,167 | $10,167 | ($10,661) |
| Nov 2027 | $9,000 | $0 | $640 | $1,167 | $10,807 | ($10,105) |
| Dec 2027 | $9,600 | $0 | $680 | $1,400 | $11,680 | ($9,348) |
January and February bring nothing, since the first carrier appointments are expected to land in March. Revenue then rises from $3,600 in March to $11,680 in December, and every month loses money before interest and depreciation. The autumn window adds nothing to Year 1 revenue because those policies start on 1 January 2028. Cash falls month after month, so the lowest month-end balance is the last one (Dec), and Year 1 closes with $152,947 in the bank. The monthly view leaves out carrier payment timing, which the annual figures include. Years 2 to 5 are spread evenly by the model. In practice the window commission arrives in January and February of Year 2 and is spent over the next ten months, so the real low point falls at the end of the year, just before the next window pays.
Who is hired, and when
| Role | Annual wage | Starts | Year 1 end | Year 2 end | Year 3 end | Year 4 end | Year 5 end |
|---|---|---|---|---|---|---|---|
| Founder and principal agent | $72,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Licensed Medicare agent (salary plus commission) | $46,000 | Month 8 | 1 | 1 | 1 | 1 | 1 |
| Enrolment and service specialist (licensed) | $42,000 | Month 13 | – | 1 | 1 | 1 | 1 |
| Licensed agent, Medicare and individual plans (salary plus commission) | $48,000 | Month 21 | – | 1 | 1 | 1 | 1 |
| Compliance and records coordinator (part time, 20 hours a week) | $24,000 | Month 30 | – | – | 0.5 | 0.5 | 0.5 |
| Second senior Medicare agent (salary plus commission) | $52,000 | Month 33 | – | – | 1 | 1 | 1 |
| Individual and small-group account manager (licensed) | $50,000 | Month 37 | – | – | – | 1 | 1 |
| Licensed Medicare agent, fifth producer (salary plus commission) | $50,000 | Month 45 | – | – | – | 1 | 1 |
| Second enrolment and service specialist (licensed) | $44,000 | Month 49 | – | – | – | – | 1 |
| Total payroll incl. on-costs | $115,782 | $223,520 | $302,273 | $442,467 | $540,680 |
Dana works alone until the first licensed agent starts in month 8 (August 2027), early enough for carrier certification before the October window. The rest follow: a service specialist in month 13, a second licensed agent in month 21 (September 2028), a part-time compliance and records coordinator in month 30, a second senior Medicare agent in month 33, an account manager for individual and group clients in month 37, a fifth producer in month 45 and a second service specialist in month 49. Agent wages shown are base pay. Variable pay sits in the "agents' variable pay and carrier fees" line and overtime has a line of its own. The coordinator's $24,000 is a part-time salary.
Profit and loss
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $82,487 | $388,600 | $663,300 | $953,800 | $1,234,400 |
| Agents' variable pay and carrier fees | ($10,919) | ($51,440) | ($87,802) | ($126,256) | ($163,400) |
| Gross profit | $71,568 | $337,160 | $575,498 | $827,544 | $1,071,000 |
| Payroll incl. on-costs | ($115,782) | ($223,520) | ($302,273) | ($442,467) | ($540,680) |
| Rent | ($24,000) | ($24,700) | ($33,500) | ($34,500) | ($35,500) |
| Utilities | ($2,400) | ($2,500) | ($3,200) | ($3,300) | ($3,400) |
| Marketing | ($48,000) | ($70,000) | ($85,000) | ($100,000) | ($110,000) |
| Insurance | ($8,000) | ($9,000) | ($10,500) | ($11,500) | ($12,500) |
| Professional fees | ($9,000) | ($9,500) | ($10,000) | ($11,000) | ($12,000) |
| Software subscriptions | ($13,000) | ($16,000) | ($20,000) | ($23,000) | ($25,000) |
| Annual carrier certification, licence renewals and continuing education | ($2,500) | ($3,500) | ($4,500) | ($5,000) | ($5,500) |
| Phones, call-recording storage, postage and supplies | ($5,500) | ($7,500) | ($9,500) | ($11,000) | ($12,000) |
| Equipment replacement and new-hire kit | $0 | ($4,000) | ($4,000) | ($6,000) | ($3,000) |
| Overtime for hourly agents and specialists in the autumn window | ($2,700) | ($8,300) | ($11,500) | ($17,500) | ($21,000) |
| Commission chargebacks (policies cancelled in the carrier's clawback window) | ($2,900) | ($10,800) | ($15,400) | ($19,700) | ($22,900) |
| Annual pay raises (3% a year) | $0 | ($6,706) | ($18,408) | ($41,029) | ($67,860) |
| EBITDA | ($162,214) | ($58,866) | $47,716 | $101,548 | $199,660 |
| Depreciation | ($3,343) | ($3,343) | ($3,343) | ($3,343) | ($3,343) |
| Interest | ($6,300) | ($5,942) | ($5,107) | ($4,180) | ($3,150) |
| Income tax | $0 | $0 | $0 | $0 | ($21,160) |
| Net income before start-up costs | ($171,856) | ($68,151) | $39,267 | $94,025 | $172,007 |
| Start-up costs expensed at opening (legal, licensing, launch marketing) | ($20,500) | $0 | $0 | $0 | $0 |
| Net income after start-up costs | ($192,356) | ($68,151) | $39,267 | $94,025 | $172,007 |
Year 1 loses $171,856 before start-up costs and $192,356 after them. Year 2 loses another $68,151, because a service specialist, a second agent and marketing of $70,000 arrive before the renewal book can pay for them. Year 3 turns profitable at $39,267, with an EBITDA margin of 7.2% (EBITDA is earnings before interest, depreciation and tax). The margin reaches 10.7% in Year 4 and 16.2% in Year 5. No income tax falls due until Year 5 because earlier losses are carried forward.
Cash movements
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Cash from operations | ($198,053) | ($98,354) | $12,505 | $65,533 | $144,599 |
| Equipment and fit-out | ($19,000) | $0 | $0 | $0 | $0 |
| Funding received | $370,000 | $0 | $0 | $0 | $0 |
| Loan principal repaid | $0 | ($7,579) | ($8,414) | ($9,341) | ($10,371) |
| Owner distributions | $0 | $0 | $0 | ($25,000) | ($40,000) |
| Net change in cash | $152,947 | ($105,933) | $4,091 | $31,192 | $94,229 |
| Closing cash | $152,947 | $47,014 | $51,105 | $82,296 | $176,525 |
The bank balance stays above zero throughout and bottoms out at $47,014 at the end of Year 2, after a $105,933 fall that year. Year 2 costs about $37,000 a month, so that balance buys about five weeks, and December is the low point because the next window's commission has not yet been paid. A slow window or a carrier delaying payments in that year would call for new money from the owners or the bank. Cash recovers from Year 3 as renewals build. Distributions start in Year 4, once cash and paid-in capital can cover them; retained earnings are still negative then.
Balance sheet
| At year end | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Cash | $152,947 | $47,014 | $51,105 | $82,296 | $176,525 |
| Accounts receivable | $9,040 | $42,586 | $72,690 | $104,526 | $135,277 |
| Equipment and fit-out (net) | $15,657 | $12,314 | $8,971 | $5,629 | $2,286 |
| Total assets | $177,644 | $101,914 | $132,767 | $192,451 | $314,088 |
| Bank loan | $60,000 | $52,421 | $44,007 | $34,666 | $24,296 |
| Paid-in capital | $310,000 | $310,000 | $310,000 | $310,000 | $310,000 |
| Retained earnings | ($192,356) | ($260,507) | ($221,241) | ($152,215) | ($20,208) |
| Total liabilities and equity | $177,644 | $101,914 | $132,767 | $192,451 | $314,088 |
Margins, break-even and debt cover
| Measure | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| EBITDA margin | -196.6% | -15.2% | 7.2% | 10.7% | 16.2% |
| Net margin (before start-up costs) | -208.3% | -17.5% | 5.9% | 9.9% | 13.9% |
| Payroll incl. pay raises as share of revenue | 140% | 59% | 48% | 51% | 49% |
| Revenue per full-time equivalent at year end | $41,244 | $97,150 | $120,600 | $127,173 | $145,224 |
| Average monthly revenue | $6,874 | $32,383 | $55,275 | $79,483 | $102,867 |
| Monthly revenue needed to cover operating costs | $22,454 | $38,037 | $50,692 | $69,730 | $83,690 |
| Debt service cover (EBITDA / interest + principal) | -25.7x | -4.4x | 3.5x | 7.5x | 14.8x |
An average month has to bring in more than the "needed" figure in the ratios table for the agency to cover its running costs. Year 1 averages $6,874 against $22,454 needed. Year 2 averages $32,383 against $38,037 and still loses money. Year 3 averages $55,275 against $50,692. Debt cover is negative in Years 1 and 2, as the agency loses money while paying interest, and reaches 3.5x in Year 3. Revenue per full-time equivalent is low early because renewals have not built up: $41,244 at the end of Year 1 and $145,224 at the end of Year 5.
If sales fall 20% short
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $65,990 | $310,880 | $530,640 | $763,040 | $987,520 |
| Net income before start-up costs | ($167,882) | ($68,346) | ($7,659) | $78,483 | $117,197 |
| Net income after start-up costs | ($188,382) | ($68,346) | ($7,659) | $78,483 | $117,197 |
| Closing cash | $158,729 | $59,310 | $22,497 | $69,514 | $155,083 |
Here every revenue line falls 20% in every year, window sales included: 224, 336, 448 and 528 in 2027 to 2030. Dana responds by starting every hire from month 13 six months later, dropping the second senior Medicare agent, taking a 20% pay cut and paying no distributions. Marketing stays at the planned figure, because window sales depend on it. Capacity still holds, because the licensed specialist and the account manager write window enrolments too: 350 against 336 needed in 2028, 490 against 448 in 2029 and 560 against 528 in 2030. Under those terms the agency ends every year with cash in hand, never below $22,497, which is under a month of costs. It loses money in Years 1 to 3 and profits from Year 4, at $78,483 against $94,025 in the base case. Equity ends Year 1 at $121,618. The owners would need to be ready to add money in Year 3. Without the response, the same shortfall leaves the agency overdrawn by $26,215 at the end of Year 2 and loss-making through Year 5.
Sources
- Medicare.gov, Joining a plan: Open Enrollment Period (15 October to 7 December), Medicare Advantage Open Enrollment Period (1 January to 31 March) and the seven-month Initial Enrollment Period.
- Connect for Health Colorado, Preparing for Plan Year 2027: open enrollment from 1 November 2026 to 15 January 2027, with enrolment by 15 December for a 1 January start. HealthCare.gov, Open enrollment period: enrolment outside the window after life events.
- Bureau of Labor Statistics, Insurance sales agents, Occupational Outlook Handbook. Source of the $62,280 median (May 2025), the 3% growth projection for 2025 to 2035 and the notes on agent pay.
- Colorado corporate income tax rate of 4.4%: Tax Foundation, Colorado.
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