The new Broker Disclosure requirements that go into effect December 27, 2021 is directed at eliminating the traditional ambiguity surrounding the structure of compensation and incentives paid to brokers and consultants.

Specifically, the Consolidated Appropriations Act (CAA), from where these new requirements originated, outlines three major components of the law:

  • The broker’s responsibility to provide a disclosure of services being rendered
  • The broker’s responsibility to provide a disclosure of all compensation received
  • The timeframe requirements and responsibilities for both the broker and the client

The benefit to employers is substantial…understanding how a broker is compensated for the services they expect to provide maintains a better level of broker/client transparency and enables the business owner to make wiser decisions in regard to their group health plans.

 
 
Services Disclosure

A comprehensive detail of services being provided under the broker agreement allows a broker’s client to better evaluate the proposed offering in light of compensation the broker will receive.

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Compensation Disclosure

A broad range of compensation is subject to disclosure under the Act. Although this information will be unfamiliar to many smaller companies, event larger entities that have filed 5500 forms will find the new disclosure requirements to encompass much more information.

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Timeframes

The requirements for brokers to provide the necessary information under the Act is mostly based on “reasonable” timeframes, but also places some responsibilities on the client, or businessowner.

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Role of General Agents

Not all businesses may be aware of or understand the role of a General Agent in regard to their group insurance program. Yet, the role of the GA as intermediary between the broker and the insurance carriers is an important one that can impact the success of the broker/client relationship.

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FAQs

Although there may still be some additional clarification coming from the Department of Labor in regard to these new regulations, we’ve done our best here to anticipate many of the questions that business owners may have regarding these new requirements.

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Glossary

To Aid an Understanding of the Health Insurance Marketplace.

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