30 Nov 2014

The number of individuals participating in an insurance plan each month. Member month is calculated by taking the number of individuals enrolled in a plan and multiplying that sum by the number of months in the policy.

One individual who has a policy that lasts a year creates twelve member months (1 person x 12 months in the policy). If that policy has a duration of six months, a single member will generate six member months (1 person x 6 months in the policy). For policies with multiple members, such as a family on a health insurance policy, the number of member months is larger because each family member counts. For example, a family of four enrolled in a twelve-month health insurance policy generates 48 member months (4 people x 12 months in the policy).

Member months are most commonly found in the reports of group insurance companies, such as group health plans. Determining how many individuals are enrolled in an insurance plan requires dividing the total number of member months by the number of months in the year. Thus, if an insurer indicates that its member months total 1500 then the total number of individuals covered is around 125 (1500 member months / 12 twelve months). This is an approximation because some members may have policies that last a year, while others may have policies that last a shorter duration. For example, 1500 member months could mean 125 members on annual policies, or it could mean 100 members on twelve-month policies and 50 members on six-month policies ([100 x 12 months] + [50 x 6 months] = 1500 member months).

Member months can be used for other calculations, such as average monthly premiums. This figure can be calculated by dividing the revenue generated by a group policy by the total member months, which gives an approximation for the average cost of a policy.

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