Fundamentals · 5 min read
Why Medicare Commissions Are Prorated (Simple Example)
The rule in one sentence
For Medicare Advantage, CMS pays the full initial only when a plan's effective date is in January; for any other month you're paid a prorated portion for the months remaining, and pick up the rest as a renewal next year.
Example on $694 initial (most-states 2026)
That's about $57.83/month:
- Effective January 1 — full $694.
- Effective July 1 — about 6 months remain, roughly $347.
- Effective October 1 — about 3 months remain, roughly a quarter up front.
Then in January the plan enters its first full renewal year and you begin earning the renewal, so the money isn't gone.
AEP enrollments written in the fall for a January 1 effective date pay the full initial — a big reason AEP is the busiest, most lucrative stretch of the year.
Why CMS does it
Commissions track the months of coverage you generate in a calendar year; it's identical across carriers because CMS sets the rule.