How are PEPM and PMPM commissions paid?

by | Dec 8, 2022

Defining PEPM & PMPM

In insurance, PEPM stands for per employee per month and is a method some carriers choose to price their benefits or coverage. Similarly, coverage can be priced per member per month or PMPM. While seemingly the same as the PEPM, PMPM calculates premiums on how many members are on the policy. The term member includes any spouses or dependents that may be on an individual employee’s policy, so the premiums could be more expensive if several employees select plans with coverage for dependents.

Insurance policy document containing PEPM and PMPM terms being passed between two people.

How is commission calculated on PEPM & PMPM Policies?

Insurance producers that sell policies with PEPM and PMPM terms will receive commission on how many employees or how many members are actively enrolled in a given plan, respectively. The commission rate a producer receives can vary and depend on the individual policy, as well as the carrier.

Unlike policies that earn an insurance producer a flat rate, PEPM and PMPM commission payouts can fluctuate if the active enrollees increase or decrease month to month.

When are PEPM & PMPM commissions paid?

As the name suggests, commissions accrued on PEPM and PMPM policies may be paid out monthly, but these earnings can also be paid out on a quarterly or yearly basis in accordance with when the premiums from each client are received.

The pay cycle frequency for PEPM and PMPM earned commissions should be determined based on what makes the most sense for your business. However, as stated above, the number of active enrollees in a plan can change frequently and having PEPM and PMPM commissions paid to insurance producers monthly reduces the need for chargebacks.

Simplify PEPM & PMPM Commission Calculations

Insurance commissions can be complex and PEPM or PMPM policies could only be one of many products and services that producers may sell. Plus, carriers often have several plan and policy options with differing commission rates. The complexity of constantly changing variables such as enrollment participants can make it very difficult to calculate these types of commission payouts using only Excel spreadsheets.  

The easiest solution? Automate! Core Commissions’s intuitive, industry-leading software allows for easy, consistent, and accurate commission calculations. Capable of handling multiple commission rate calculations at once, Core’s software is ideal for insurance agencies utilizing PEPM as one of their commission calculation rules.

An added bonus? Core’s support team is available to help you sort through any questions or issues that may arise with your calculations to ensure that all of your commissions are paid timely and accurately. Contact us for more information or schedule a free demo and we can show you firsthand how we can seamlessly incorporate these calculation rules into your commission structure.

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