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Commission Calculations

Commission Calculations is the functionality to process commission for the selected parameters.

Run Commissions or Commission Calculation page

Run Commissions:

Selecting Run Commissions will open the Commissions Calculation page. From this page the admin will select the parameters for the Policy Transactions to be picked up in the cycle. The values that need to be populated or selected are:

Commission Processing Date:

The date entered is a determining factor for which Transactions, Chargebacks, and Adjustments are picked up in the cycle. Transactions with a Transaction Date on or before the Commission Processing date will be picked up. Chargebacks and Adjustments with a Processing Date on or before the Commission Processing date will be picked up after ‘Apply’ is selected for them.

Processing Type:

There are three options for Processing Type: New Enrollments, Monthly Recurring, and Process All.

New Enrollments will only pick up Transactions from Policies that have not had previous commission activity. When a new Policy is picked up under New Enrollments, if that new Policy has two or more Transactions, with no previous Transactions that have been processed through a cycle to close, then it will pick up all the open Transactions. Imported Policies from a ‘Book of Business,’ even though previous months could have previously paid in a legacy system, would be new to Comissio so the first Transaction(s) would also be picked up as New Enrollments.

Monthly Recurring will not pick up the Policy Transactions described for New Enrollments as described in the previous paragraph. This will pick up Transactions that have had at least one previous Transaction that has gone through a Cycle that was closed.

Process All when selected will pick up all Transactions whether there was a previous Transaction that has gone through a Commission cycle to close or not.

Issuer

All Issuers or specific Issuers can be selected to be included in the Commission Cycle. The Issuers selected affect the Policy Transactions, Chargebacks, and Adjustments that can be picked up. Only Transactions for the selected Issuers will be picked up. Only Chargebacks for the selected Issuers can be picked up. Adjustments that have an Issuer entered will only be picked up in a cycle for that selected Issuer. Adjustments that do not have an Issuer entered can be picked up by any cycle.

Commission Calculation Summary

The system will look for and pick up Transactions that fit the parameters entered for the run, Commission Processing Date, Processing Type, and Issuer.

For Policies that have not gone through a previous cycle, it will pull values from the Policy, Transaction, Agent Detail pages, Custom Settings, and Commission Rates. For Policies that are not new, or have a custom Commission Distribution saved, the Agents and Rate information will come from the Commission Distribution.

When processing for new Policies, for each Transaction, the system will start with the Writing Agent (Level 1) and calculate any Advance (on new Policies) and Commissions. The system will then determine any Advance and Commissions for the Upline/next Level Agent, then the next level until the top-level Agent is reached.

Advances

Advances are only created for the first Transaction in a Policy. They are calculated with several factors starting with the Pay Code on the Policy. The Pay Code must be set to allow Advances, for example ‘Default,’ that does not have ‘As Earned’ checked in the Pay Code details.

When the Pay Code has ‘As Earned’ checked, like for Pay Codes ‘As Earned’ or ‘Converted’, then all Agents for the Policy will be paid As Earned (no Advance) and commissions will go to Earned Commissions.

When the Pay Code does allow Advances, the system will look at Advance Months entered in Pay Code details, Commission Rates, and Custom Settings. It will also look for As Earned settings in Agent Details or the Agent’s Custom Settings. See bullet points below for full logic to determine the Advance Months.

The Advance Months are then multiplied by the Commission Rates. For commissions based on percentage rates, the Commissionable Premium is multiplied times the Commission Rate times the Advance Months. For is multiplied times For commissions based on a Fixed amount, the Advance is multiplied times the Fixed Amount. 

As Earned/ Advance Logic

  • If a Policy Pay Code has As Earned checked in Pay Code Details, then all agents paid As Earned.
  • If the Policy has DEFAULT Pay Code (with no Advance Values in Pay Code Details):
    • System will first look at Agent Details and see if it 'As Earned' is checked, and if so, then Agent is to be paid As Earned, UNLESS THERE IS A CUSTOM SETTING WITH AN ADVANCE FOR THE ISSUER/PRODUCT TYPE THEN USE THAT ADVANCE
    • If there is a custom setting for the Agent with 'As Earned' for the Issuer/Product Type, then Agent is to be paid As Earned.
    • If there is a Custom Setting for the Agent with Advance Value for the Issuer/Product Type, use that value for the months to Advance for the Agent (even if there is also an Alternate Contract in the Custom Setting for the Issuer/Product Type).
    • If there is not a Custom Setting for the Agent with AS EARNED or an Advance Value, then if there is a Custom Setting for an Alternate Contract, use the Advance value from the Commission Rates for that Alternate Contract.
    • If there is not a Custom Setting for the Agent with AS EARNED or an Advance Value, AND there is NOT a Custom Setting for an Alternate Contract, use the Commission Rates for the Contract from the Agent Details.

 

  • If Policy has a Pay Code with an Advance Value in the Pay Code Details (like for 10 months or 3 months
    • System will first look at Agent Details and see if it 'As Earned' is checked, and if so, then Agent is to be paid As Earned. UNLESS THERE IS A CUSTOM SETTING WITH AN ADVANCE FOR THE ISSUER/PRODUCT TYPE THEN USE THAT ADVANCE ONLY if IT IS NOT GREATER THAN THE PAY CODE ADVANCE, ELSE USE THE NUMBER OF MONTHS IN THE PAY CODE
    • If there is a custom setting for the Agent with 'As Earned' for the Issuer/Product Type, then Agent is to be paid As Earned.
    • If there is a Custom Setting for the Agent with Advance Value for the Issuer/Product Type, use that value for the months to Advance for the Agent (even if there is also an Alternate Contract in the Custom Setting for the Issuer/Product Type) ONLY if IT IS NOT GREATER THAN THE PAY CODE ADVANCE, ELSE USE THE NUMBER OF MONTHS IN THE PAY CODE
    • If there is not a Custom Setting for the Agent with AS EARNED or an Advance Value, then if there is a Custom Setting for an Alternate Contract, use THE ADVANCE VALUE FROM THE PAY CODE OF THE POLICY
    • If there is not a Custom Setting for the Agent with AS EARNED or an Advance Value, AND there is NOT a Custom Setting for an Alternate Contract, use the ADVANCE VALUE FROM THE PAY CODE OF THE POLICY

 

Note: typically, where a Pay Code that specifies the number of months for Advance is helpful is for Short Term Medical Policies that are paid monthly but where the overall term of the Policy determines the Advance. So, if a 12-month term has a 6-month Advance, and a 6-month term pays a 3-month advance, and all the Policies have the same Plan Name, then using different Pay Codes will allow paying the correct Advance.

 

 

Pay Code example for one created for 3-month advance:

Rates and Calculations

Rates used in commission calculations come from Commission Rates or the Commission Distribution. When there is not a custom Commission Distribution saved prior to the first Cycle, the first Transaction processed will look at the Contract of the Agent, or an Alternate Contract if it matches the Issuer/Product Type of the Policy, to get the Commission Rates for the Product in the Policy. After the first Transaction is processed the system will look at the Agents and Rates from the Commission Distribution for calculating commissions.

New Enrollments:

The system will look for a Plan Rate that matches the Commissionable Product of the Policy (Issuer, State, Product Type, and Plan Name). It will look at the Effective Date or Submitted Date of the Policy to match to the date range in the Commission Rates. Then the system will look for the row of the From Month and To Month to match the month of the Transaction and bring in the associated (percentage) Rate or Fixed Amount. So, for example, if the Rates are set up for 50% for Months 1 through 12, and the Transaction is for the first month, it will pull in that rate.

After commissions are determined for the Writing Agent for a Policy, it will look at the Upline value of the Agent, or from a Custom Setting an Alternate Upline value- if it matches the Issuer/Product Type, and then match to the Contract Plan Rate for that Agent in the same way as described for the Writing Agent.


 

The commission cycle uses the Plan Rate less the Plan Rate of the previous level Agent for the Policy.

  • The Writing Agent (Level 1) does not have a previous Agent, so for example, if the Plan Rate is 25%, that is the rate that will be applied to the Premium and any Advance Months.
  • For Agents higher than level 1, their Rate from Commission Rates has the previous Agents rates subtracted. So, if the writing Agents Rate were 25%, and the next levels Plan Rate was 35%, that Agent would have a rate of 10% (35% -25%) applied.
  • The final rate applied times the Premium is labeled ‘Commission Rate’ in the Results page of the cycle, so from the Previous examples you would see a Commission Rate of 25% for the Level 1 Agent and 10% rate for the Level 2 Agent.
  • The same process applies when the rates use Fixed amount, so if Level 1 has a rate of $20, they get $20, if the Fixed Amount rate for the next level is $35, then they would have a rate of $10 ($35 - $25) applied for each month (and times Member Count for Group). The Fixed Amount displayed in the Results page is the product of Fixed Amount of the Agent less the Fixed Amount of the previous Agent.

If there is an Advance for the Commission, the system will multiply the Commission Rate times the Advance times the Commissionable Premium and display the value in the Advanced Commission field in the Results Page. If there is a Fixed Amount Rate, then the system will multiply the Fixed Amount times the Advance times any Member Count and display the result in the Advanced Fixed Amount field in the Results page.

If an Advance Admin Rate is entered into the Commission Rates, the sum of the Advanced Commission plus Advanced Fixed Amount is multiplied times the Admin Fee Rate to determine the Admin Fee for the Policy.

The Net amount for the Policy displayed in the Results page is the sum of Advanced Commission, Advanced Fixed Amount, Earned Commission, less any Admin Fee.

If there was an Advance paid for the Agent, Comissio will also generate one month of Earned Recovery to earn back part of the Advance. It does not reduce Net but just the outstanding liability associated with the Agent. See the following section for full details on tracking and earning back Advances.

Multiple Month One Transactions and Negative Month one Transactions

If there are multiple month-one Transactions for positive amounts on a new Policy, they will all generate advances. This is to accommodate for riders or plan enhancers. A ‘Month One’ Policy is one where the Paid Thru Date (PTD) on the Transaction is one month from the Effective Date of the Policy. Logic that applies to advances occur in the first cycle only and only on Transactions for that first month.

If there are month one Transactions that are negative, with a negative Premium amount for percentage-based policies, or a negative Member Count for fixed rate-based policies, they will be applied ‘as earned’ and will not advance.

Negative Transactions for month one can also ‘cancel out’ a matching positive Transaction so that it does not advance. Where this helps is when a Carrier charges a Policyholder, but than it is canceled, or the payment is rejected, and sometimes charged again with a different payment.

  • The carrier statement and resulting three Transactions in Comissio may be for example in Premium amounts of $200, $200, and -$200. In this case, one $200 Transaction would advance, but the other $200 would not advance. With a 6-month advance and 25% commission rate, the commissions would be $300 ($200 x 25% x 6 months), $50 going to Advance Recovery ($200 x 25%), and -$50 (-$200 x 25%).
  • If there were just two month-one Transactions of Premium amounts $200 and -$200, the commissions would be $50 ($200 x 25%), and -$50 (-$200 x 25%).
  • If the Transaction amounts do not match up, then the Advance would still occur on the Positive amount, so for Premium amounts of $200 and -$100, the commissions would be $300 ($200 x 25% x 6 months) and -$25 (-$100 x 25%).

Any Transactions, even if they are for month one, that are calculated in cycles after the first cycle for the Policy do not generate advances. Transactions for month two and beyond also do not generate Advances, even if they are processed in the first cycle of a Policy.

Warnings can be displayed when there is a negative month one Transaction processed in the first cycle, but not if it is canceled out by a matching positive amount month one Transaction. So, if there is only one month-one Transaction for -$100 you would see a warning. If there were two Transactions, one for -$100 and one for $100, then there would not be a warning. The warning is to alert the admin in case they feel they need to follow up to find out where a missing positive Transaction is to go with a negative Transaction. The negative month one warning does not occur on Policies with Pay Code As Earned or Converted.