What Does PEPM Mean in Employee Benefits?
PEPM stands for per employee per month. It is how many fees and rates are quoted in group benefits: a flat dollar amount for each enrolled employee, each month. This guide shows where it appears and how to turn it into an annual cost.
What PEPM means and where you see it
Per employee, per month
One dollar figure applied to each enrolled employee for each month of the plan year.
ASO administration fees
Administrative services only plans often charge the carrier or administrator fee as a PEPM amount.
Stop-loss premiums
Specific and aggregate stop-loss coverage for self-funded and level-funded plans is commonly priced per employee per month.
How to use a PEPM figure
Annual cost
Multiply the PEPM by the number of enrolled employees and by 12 to see the yearly cost.
Composite and tiered rates
Group health rates can be quoted as a composite per employee or by tier. Know which basis a quote uses.
Voluntary and ancillary rates
Some ancillary benefits are priced per employee per month, while others are priced per $1,000 of coverage or by age.
Back to the benefits glossary
Plain-English definitions for the terms employers and employees ask about.
Compare quotes on the same basis.
A PEPM looks simple, but quotes are only comparable when they count the same thing. One may count every enrolled employee, another every eligible employee, and a third may price each covered member. Ask what the figure is multiplied by.
We put every fee on the same basis before you compare, so a low PEPM that hides a larger charge elsewhere does not win by default.
Questions we get
What does PEPM stand for?
Per employee per month.
What is the difference between PEPM and PMPM?
PEPM is per employee. PMPM is per member per month, which counts each covered person, including dependents.
How do I turn PEPM into an annual cost?
Multiply the PEPM by the number of enrolled employees and by 12.
Does PEPM count employees who waive coverage?
It depends on the quote. Ask whether the figure applies to enrolled employees or to all eligible employees.
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