When the dust settled after another successful Capitol Conference, I took a few minutes to reflect on the event, the association and our industry in general. The good news first. The event was a huge success and the state of our association is still very strong. Hundreds of members from across the country took part in this year's event. NC itself was represented by almost 30 members, several of whom where first time attendees. We met with nearly every legislator in NC and expressed our views on key talking points of concern. Hopefully our knowledgeable insight and passion for the issues will resonate as our legislators work to develop laws that will affect the policies we sell and the clients we serve. Our key talking points this year lied in 4 main areas: Covid-19 Relief, Market Stabilization, Public Option (Medicare For All), Medicare Issues. I am confident our advocacy hit home on most of our key points, but we need to keep working to ensure our voice is heard moving forward.
Now for the bad news. One of the most significant things that will affect our industry in the very near future was not something we were able to advocate on during the Capitol Conference. That is because it was quickly passed into law as a piece of cut-and-paste legislation included within the Consolidated Appropriations Act (CAA). I am referring to broker compensation transparency. If you are not familiar with this, you need to start thinking about it now. The change it will cause to our industry and business operations is potentially massive.
Here is some information I took from BenefitMall regarding these new regulations:
Currently, Section 408(b)(2) of ERISA requires any compensation paid to service providers be “reasonable.” While this generally applied to retirement plans, the CAA adds additional requirements to this section. Effective December 27, 2021, brokers and consultants of ERISA covered group health plans, regardless of size, will be required to execute a written contract with a responsible plan fiduciary which includes the following information:
A description of the services to be provided.
If applicable, a statement that the broker/consultant plans to offer fiduciary services to the plan.
A description of all direct compensation the broker expects to receive (in the aggregate or by service).
A description of all expected indirect compensation including vendor incentive payments, a description of the arrangement under which the compensation is paid, the payer of the compensation, and any services for which the compensation will be received.
Any transaction-based compensation (commissions or finder’s fees) for services and the payers and recipients of the compensation.
A description of any compensation the broker/consultant expects to receive in connection with the contract’s termination and how any prepaid amounts will be calculated and refunded upon termination.
These new rules apply only when the broker or consultant expects to receive at least $1,000 in direct or indirect compensation (whether paid to the broker, an affiliate, or subcontractor). It is preferred that the disclosure should occur well in advance of either the contract date or the renewal date.
For the purposes of this new regulation, the definition of a broker or consultant is broad and includes parties who are not considered traditional brokers/consultants, such as pharmacy benefit managers, wellness vendors, and third-party administrators. Please note that plan fiduciaries must report brokers/consultants to the DOL if they do not comply with these requirements.
At this point, the regulations for this part of the CAA have not been written. The DOL is currently working on that task with the anticipation that it will be completed around mid-summer. That means that although there is nothing we can do to influence this from going into effect, there is time for us to advocate for a favorable interpretation from our standpoint. Our NAHU team is working on that as we speak. I'm sure we are going to be hearing much more on this in the coming months. Again, this is the value that being a member brings. Advocacy for our future. Thank you to all that see that value and support the cause. For anyone interested in helping, please recruit someone to join. Everyone earning a living in this industry and taking advantage of the advocacy that NAHU offers should be a member.
Until next month,