PMPM stands for cost per member per month. This calculation is often used by health insurance companies to determine the average cost of health care for each of their members. It is also used by other businesses outside the health care industry whenever these businesses offer health care benefits to employees. PMPM is useful because it allows companies to estimate how much each individual member should be charged for coverage.
Things You'll Need
- Data on the number of members in the health care plan
- Data on the yearly cost of health care benefits to these members
Decide on the year for which you want to calculate the PMPM. Determine the number of people covered under the plan for this year.
Multiply the number of people covered by 12. Determine the total cost of health care benefits for all of the members under the plan for this year.
Divide the number calculated in step two by the number calculated in step one. This is the PMPM for the year.