Broker Compensation Disclosure Requirements – Effective 12/27/21

Beginning on December 27, 2021, brokers and consultants will be held to new compensation transparency obligations under the Consolidated Appropriations Act (CAA). The CAA is a spending and coronavirus relief package that was signed into law on December 27, 2020 and expands ERISA’s existing disclosure requirements. It broadened the definition of a “covered plan” to include group health plans (previously it only included retirement plans). This created new requirements for brokers and consultants to disclose any direct or indirect compensation they may receive for referring services to the plan. This new disclosure requirement applies to contracts entered into, extended or renewed on Dec. 27, 2021.

The CAA requires covered service providers (CSPs) to provide plan fiduciaries with information they need to assess reasonableness of total compensation, both direct and indirect, received by the CSP, its affiliates and/or its subcontractors. For this purpose, the term “covered service provider” means one that enters into a contract with the plan and reasonably expects $1,000 or more in compensation (direct or indirect) to be received in connection with providing the following brokerage and consulting services:

  • Selection of insurance products (including vision and dental)
  • Recordkeeping services
  • Medical management
  • Benefits administration (including vision and dental)
  • Stop-loss insurance
  • Pharmacy benefit management services
  • Wellness services
  • Transparency tools and vendors
  • Group purchasing organization preferred vendor panels
  • Disease management vendors and products
  • Compliance services
  • Employee assistance programs
  • Third party administration services
  • Development or implementation of plan design

For more information and resources to meet this new obligation including a Sample Disclosure Template visit our Broker Compensation Disclosure Resource Page at: