Broker Compensation Disclosure Reminder

With many renewals coming up in December and the first of the New Year, this is a friendly reminder that brokers must remember to provide Compensation Disclosure statements to clients every year during the renewal and of course while working to implement a brand new client.

The Consolidated Appropriations Act of 2021 (CAA 2021) included a requirement that brokers and consultants supplying services to ERISA-covered group health plans disclose to plan fiduciaries (typically the employer plan sponsor), in writing, in advance of a new sale, renewal, or change to a contract, direct and indirect compensation they receive for providing services to such plans.

This law was effective December 27, 2021 and applies where the insurance agent/agency or consultant expects to receive at least $1,000/year in ‘direct’ or ‘indirect’ compensation.

The law applies to brokers and consultants that work with:

Grandfathered and non-grandfathered group health plans (other than QSEHRAs) that are subject to ERISA

Group health plans regardless of size

Group health plans that are fully insured and self-funded

Group health plans offering, medical, dental, vision, health reimbursement arrangements (HRAs), flexible spending accounts (FSAs) and other ‘excepted benefits’ lines of coverage

Could also apply to employee assistance plans (EAPs)

Timing of Disclosure

The broker compensation disclosure is required to be provided during three (3) different scenarios as noted below.

Within 60 days of learning of a change;

Within 30 days after discovering any inadvertent errors; and

Within 90 days of a written request

Resources with information and tools that can be used to ensure compliance.

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