Most benefit plan sponsors use the assistance of insurance brokers or consultants to help with developing plan design, selecting insurance products, implementing plans, and other administrative services. Of course, you know your broker or consultant is paid for their services, but do you know how much? In the past, it could be difficult to identify the fees charged by those assisting with your medical, dental, and vision plans, but that’s changing.
As planning for benefits for the 2023 plan year begins, health plan fiduciaries can expect to receive information from their services providers on the direct and indirect compensation received for their assistance. The enactment of the Consolidated Appropriations Act in 2021 created a requirement for fee transparency in service providers’ charges to group health plans. The service provider need not call itself a broker or consultant for this fee transparency rule to apply. Contracts executed on or after December 27, 2021, are covered, and it applies to all size groups when the service provider expects to receive $1,000 or more in compensation for their services.
The plan’s ERISA fiduciary will receive the fee disclosure information and a description of the services provided. The new rule doesn’t state a requirement of how the cost information must be presented, so it could vary by plan, for example, using a formula, per capita charge, or another reasonable method.
Health plan fiduciaries can use the cost information to evaluate the reasonableness of the provider’s compensation or to compare costs with alternative providers. It may also help in the evaluation of any associated conflicts of interest.
See the DOL’s Field Assistance Bulletin No. 2021-03 for more guidance on the new rule. If you have questions, contact the Employers Council Member Experience team by email or call 800-884-1328.
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