Whether you’re part of a Medicare FMO, or an independent agent, one thing is certain – the only dependable constant within our industry is change. This is especially true when it comes to legislation, and in the wake of the global pandemic, this factor has increasingly been thrown into the spotlight.

When it comes to adapting and responding to legislative changes, there is, of course, an increased burden upon our profession. But with legislation adapting to help increase protection – be that for customers, from predatory behavior in the market, or to improve the operation of businesses themselves – it’s necessary to accommodate this additional change.

One of the biggest changes that Medicare FMOs have needed to be cognisant of in recent years, from an accounting standpoint, came in the form of ASC 606.

What exactly is ASC 606 and what is its potential impact upon the Medicare insurance industry? In this article, we’ll explain all…


What is ASC 606?

When Accounting Today referred to ASC 606 as the “biggest change to the accounting standards in the last 100 years” they could hardly be accused of hyperbole. The result of collaborative development on the part of the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB), the ASC 606 underwent a somewhat complicated birth, with multiple Accounting Standards Updates (ASU) issued as it closed in on its goal – the ability to recognize revenue more consistently.

At its core, the ASC 606 represents a standardization framework for financial reporting that delivers clarity for investors and customers alike. The ASC 606 aims to transform business for the better by creating a standardized reporting framework that works across all industries and industry incumbents.

Who’s impacted by the changes? All public businesses and organizations that entered into contracts or sales agreements with customers from the fiscal year after December 15, 2017 onwards are affected by ASC 606. As of 2019, this applies to both private and public sector business, as well as profitable and non-profit institutions. Essentially, if you sell goods or services, the ASC 606 framework applies to you.

The ASC is especially important to businesses that run on a subscription basis, as it takes into account the full lifecycle of a customer. This means that costs incurred by them at each of these stages such as add ons, upgrades and downgrades etc can all be factored in.


The 5-Step ASC 606 Model

1.  The 5-Step ASC 606 Model

This initial step outlines the criteria that must be met when a contract is entered into between a company and a customer. This doesn’t necessarily need to be a signed contract – any contract with enforceable rights and obligations can be counted. The essential parts of any contract are:

  • All parties have approved the agreement
  • All parties are committed to fulfilling their obligations
  • Each party’s rights are identifiable
  • Payment terms are identified
  • The contract has commercial substance
  • Collectibility is probable

2. Identify the performance obligations in the contract.

The second step determines the expected performance requirements within the contract. Again, performance obligation merely denoted a promise to transfer goods or services to the customer. In order to determine this, distinct services need to be identified as having been promised to the customer. A good or service is distinct when

  • The customer can benefit from the actual good or service
  • It can be transferred independently of other performance obligations in the contract

3. Determine the transaction price.

Next, the price associated with the business supplying products or services to the customer must be determined. This transaction price relates to the cash and non-cash consideration that an entity is entitled to receive from the customer. It also factors in any variable considerations such as price concession, volume discount, and rebates to be estimated upfront.

4. Allocate the transaction price.

This step outlines how the price is allocated across the various obligations of the contract. If the product or service delivery is recurring in nature, then a continuous performance obligation can be said to be in place. To accommodate this, the seller can split the total amount of consideration to be recognized as revenue for each performance obligation.

5. Recognize revenue when or as the entity satisfies a performance obligation.

Finally, this step specifies how revenues will be recognised, as well as when they will be recognized (i.e when the performance obligation is fulfilled!)


The Impact of ASC 606 Legislation

Although pushed through with the intention of simplifying revenue recognition, the new ASC 606 standard poses a particularly difficult challenge for subscription based companies, such as FMOs within the Medicare sales industry, as they can encounter challenges at each step.

Typically the most common challenges encountered related to the following two factors:

  1. Subscriptions change often
    Occurrences like upgrades, downgrades and early cancellations all have impacts on the business’s revenue and therefore can have considerable implications in the reporting process.
  2. Contracts are complex and occur over time
    Because these services are billed on a recurring monthly, or annual basis, the revenues can’t be reported at once as the business has not yet delivered the specified service, and must be deferred over the length of the contract.

Taking telecoms giant Verizon as an example, we can see how subscription based businesses can run into difficulties in their quest for compliance. Although the company began working towards ASC 606 compliance several years in advance of its full impact, it still needed to entirely reprogame its software to accommodate new ways of accounting for revenue. While a compliant solution was accomplished, it was costly – in terms of investment and time spent by their tech and finance teams. Many other businesses found themselves in a similar situation.


What does ASC 606 mean for FMOs?

ASC 606 is about more than recognizing revenue. ASC 340-40, a subtopic of ASC 606, sets out standards related to the costs incurred in order to obtain and fulfill signed contracts. Commissions are one such cost.

Previously, commission costs were recognised within the period that the contract was executed (i.e. in the period in which they were incurred.) This allowed the company to offset any revenues. Under the new legislation, all commissions and compensation have to be tracked at the level outlined by the law.

This means that error-prone spreadsheets and complex macros place a great strain on the time and resources of the company due to their inefficiencies. Additionally, it is very difficult to track the flow of data from the required level of detail to the commission expense.

That is why a commission tracking tool such as Commissionly is the perfect partner to help create efficiency within the operation and streamline the new reporting process. In order to stay compliant with the updated ASC 606 requirements, your accounting department needs to be able to depend on data that is accurate and current.

Formulas and manual processes have the capacity to get a lot more complicated, and as a result, the benefits of automation and improved collaboration that Commissionly offers represent a real lifeline, rescuing your team from burnout.


ASC 606: Smooth Future Sailing For FMOs

The demands of ASC 606 hold a number of serious implications and ramifications for all contract based businesses, however due to their nature, subscription-based businesses balancing commission-based payment structures, such as Medicare sales, have a greater challenge on their hands.

Nothing in financial legislation stays the same for long – and as compliance requirements change, so too do the solutions available to help assist businesses with meeting their obligations. Software such as Commissionly’s commission calculation tool offers an opportunity to navigate challenges with greater ease, today and in the future, however the demands around compliance evolve.

Looking to make life easier for your sales compensation team? Book a demo today.



In the competitive world of medicare FMOs, advantage is everything. When it comes to seeing real traction and success, often it’s the finer details that count – small improvements to process and practice that ultimately add up to a sum total of significant competitive advantage.

Staffing shortages and challenges within ongoing recruitment represent a very real concern for many FMOs currently operating. The difficulty of attracting (and then retaining) talented sales staff is increasing. A shift in expectations of employment and rapid technological innovation (accelerated by the Covid pandemic’s shift to home working) has somewhat leveled the playing field, making it possible for smaller agencies to compete with the larger, well-established FMOs.

As a result, FMOs of all sizes are focused on improving their offering. If this is something that your own FMO has been working on – and, in particular, if you’ve been chasing down ways to become more operationally efficient – then it’s time to consider the benefits that a commission calculator could bring to your setup.

In this article, we’ll cover ten of the most advantageous benefits a commission calculator can bring to your Medicare FMO. From quickly calculating varied commission splits, to easily enabling drawbacks and facilitating multi-currency sales – read on to learn more about the edge you can bring to your operation.


1.   Minimizes human error

While automation is typically viewed through the lens of winning time back for your busy team, another of its key advantages is often overlooked. Busy teams make mistakes. By working with an automated commission calculator, you remove this inconvenient (and often costly) risk factor.

By doing away with complicated manual spreadsheets will do more than free up your team, you’ll also ensure that the inevitable occurrence of incorrect data entry or calculation errors. Manually calculation and tracking your commissions opens the door for human error – even the most meticulous attention to detail is statistically prone to error sooner or later.

Commission calculators such as Commissionly have been created to cater specifically to the insurance sales market. This means that they’re precision engineered to provide all the dexterity of manual calculations, with none of the accidental error. So you can work faster and sleep easier.


2.   Frees up team time

The old adage rings ever true – time is money. In the age of automation, your team’s time and experience no longer needs to be squandered on repetitive tasks, and is much better applied to creative problem solving and revenue generation.

When your agents and managers are tasked with the admin of tracking and calculating their commissions (or, in some cases, spending vast quantities of time simply trying to understand complicated splits and calculations) their time and attention is compromised.

Your business’s foundations are firmly placed upon a commission based sales model – and as a result, commission rates, calculations and accrual are, of course, a primary concern of your agents. By leveraging a commission calculator tool to improve transparency and comprehension, you can give your team a much clearer picture of the state of play, freeing their focus and giving them the incentive to work efficiently.


3.   Enhances sales commission models

Commision models are frequently in a state of flux. As FMOs adapt to become more appealing and competitive to the most successful and talented agents, they need to constantly adjust and fine tune their commission rates and individual agent incentives.

Working with a commission calculator helps bring much more clarity to this decision making process, by facilitating more effective financial management, reducing uncertainty around ongoing business models. Forecasting becomes easier, and there are positive knock on effects to your agents, as you’re able to calculate the very best offers, retaining talent to strengthen your business in the short and longer term.


4.   Allows you to set effective goals

In addition to giving you clarity over your commission structures, working with a commission calculator will also allow you to get a better understanding of your team’s ongoing performance at a glance. Setting realistic targets for agents (that walk the line between motivation and possibility!) can be difficult, but when you’re running commission calculator software, you’ll be able to recognise patterns in performance with much more ease and confidence.

In addition to setting clear goals, a commission calculator enables a greater degree of clarity and transparency to your agents, both in terms of business’s financial position and the kind of  revenues expected of agents.

When the business, managers and agents all have a solid comprehension of the current state of play, it becomes easier to set goals that make sense for that time period, are likely to achieve buy-in, and are ultimately more achievable.


5.   Encourages transparency

The best disinfectant is sunlight. By working with a commission calculator your business is able to offer true transparency to your agents, removing gray areas that can rapidly become friction points – damaging to your agent relationships and time-consuming to rectify.

Commission calculators deliver transparency to the most important part of the business from the perspective of the sales agent – their earned income (both received and projected.) Through a commission calculator, every agent can see exactly what they will earn from each of their sales, delivering clarity to both the agent and the FMO.


6.   Opens communication channels

With so many agents working independently, communication is of utmost importance to any Medicare FMO. Without clear communication, delivered via open and accessible channels, efficiency within a business is hard to establish and maintain.

The basis of the most impactful communication? Trust. By investing in commission calculator software, an FMO demonstrates its commitment to its agents’ experience, showing a firm resolve to provide a fair, open and opportunity-rich environment where agents are supported to achieve their best results.


7.   Improves personalization

Personalization makes the professional world go round, and isn’t something that should be reserved for customer experience alone – your agents also care about the nature of the investment and attention that they receive. While a commission calculator can, in a slightly roundabout way, help you to develop more personalized experiences for your customers (based on the insight it sheds on highly successful agent approaches) it also enables personalized programmes and experiences for sales agents.

If managers know how their staff are performing, then are better equipped to understand where they need help and improvements. This then in turn allows the FMO to deliver the right kind of support and mentorship needed in order to more effectively drive business objectives. High performing agents can be paired into mentoring programmes, and commission structures can be tweaked depending on the kind of motivations that are being demonstrated.


8.   Creatures a scalable system

The ambition of most business models is growth – but as we all know, growth can mean growing pains. The ability to scale free from the stresses of a tech stack and administrative procedures that are threatening to buckle under the weight of your success is a blessing no business can take for granted.

Commissions calculated in the traditional, spreadsheet heavy fashion are a ticking time bomb, becoming increasingly problematic as the business scales. More data entry, more to manage, more margin for error, more time needed to investigate discrepancies and challenges. The list goes on.

The irony is that, without a dependable, automated commission calculator in place, the more successful you are, the more strained your operation becomes. More time is funneled away from revenue generation, as your team dedicates their bandwidth to rectifying errors and incorrect payments. If trust is eroded when friction flares up internally, you even risk losing your best agents (the engine of your business.) Efficiency is reduced, and ultimately profitability is affected.

A commission calculator ensures an infinitely scalable, secure system that will be able to keep pace with any degree of success within your business, accurately, efficiently and transparently.


9.   Enhances efficiency

It’s important to remember that leveraging commission calculator software does more than simply increase the efficiency of your commission calculations! A commission calculator also functions as a “self service” buffet for your agents’ queries. Instead of time-consuming interactions with responsible team members, they can instantly access information pertaining to their earnings and progress within any given time frame.

Acting as “single source of truth” countless wasted hours spent chasing the right files, spreadsheets or data sets are also saved. Accounts can be carefully controlled to give the right levels of access to all members of the organization, meaning everyone has the ability to get eyes on the information that’s relevant to them, quickly and independently.


10. Drives profitability

We’ve spoken about the need for efficiency within a business, but this is only half of the story. The reason we chase efficiency is to increase profitability. A commission calculator acts as a driving force behind multiple business activities that support profitability via more impactful and effective systems and processes.

Profitability increases when efficiency increases, because wherever systems and processes are optimized and trust is enabled, revenue cannot fail to follow.


Is your Medicare FMO ready for a commission calculator?

As the world of Medicare gets more competitive, things are getting more complex. In order to stay competitive, improvements to the technological architecture that is underpinning your operation will be the key to staying one step ahead of the competition.

More efficient internal processes. More revenue. Enhanced profitability. This trinity of interdependent goals is the key to unlocking sustained (and sustainable) growth in a busy market.

Commissionly’s commission tracking software represents the perfect fit for any medicare FMO looking to drive efficiency through their business via automation, transparency and enhanced data control. With experienced staff, well-versed in the specific needs of Medicare FMOs and their common commissioning structures, Commissionly offers expert guidance, assisted onboarding and ongoing support that factors in the common pain points of the industry.

With the impact and benefit of commission calculators so clear cut, adoption across the Medicare market is rapidly accelerating. The sooner an FMO incorporates them into their business, the better off they will be.


Speak to one of Commissionly’s Medicare commission experts to discuss the benefits for your FMO: book a demo today.