What must renewal compensation always be based on?

Renewal compensation must always be based on pro-rated for the actual months enrolled because this method ensures that compensation reflects the time an individual has remained enrolled in a plan. Pro-rated payments accurately account for the duration of coverage, aligning the financial compensation with the specifics of each member's enrollment timeline. This approach promotes fairness in the compensation structure, only rewarding the agent for the actual period they have provided service to the member.

Choosing this option over others provides a clear link between tenure and compensation. For example, calculating based on total enrollment year periods could misrepresent the agent's efforts if a member changes plans or terminates their enrollment early in the year. Similarly, relying on the average number of plan changes does not specifically measure tenure in each plan, whereas referring to the previous year's earnings may not reflect current performance or enrollment trends that impact earnings. Thus, base compensation being pro-rated for actual months enrolled ensures that it accurately represents the value and service provided to each member in a timely manner.