What do fixed costs consist of?

What do fixed costs consist of?

• A. Admin fee only.
• B. Admin fee and commissions.
• C. Admin fee, commissions, individual stop loss premium, aggregate stop loss premium.
• D. Salaries.

Answer: (C)

Fixed costs are the expenses that don’t change with how many members you cover or how many claims occur in a period. In this context, admin fees are the ongoing charges to run the plan, commissions are a set portion of the cost structure, and the individual and aggregate stop‑loss premiums are annual amounts paid to provide coverage regardless of claims. Together, these four items stay constant across different levels of plan activity, which is why they are considered fixed costs. Salaries aren’t included here because they’re often treated separately as personnel costs that can vary with staffing needs or sit outside the plan’s fixed-cost category in this framework.

Fixed costs are the expenses that don’t change with how many members you cover or how many claims occur in a period. In this context, admin fees are the ongoing charges to run the plan, commissions are a set portion of the cost structure, and the individual and aggregate stop‑loss premiums are annual amounts paid to provide coverage regardless of claims. Together, these four items stay constant across different levels of plan activity, which is why they are considered fixed costs.

Salaries aren’t included here because they’re often treated separately as personnel costs that can vary with staffing needs or sit outside the plan’s fixed-cost category in this framework.