Department of Labor Issues New Guidance on Broker Compensation Disclosure

January 3rd, 2022 in Compliance

On December 30th, The Department of Labor (DOL) issued new guidance via a Field Assistance Bulletin Field Assistance Bulletin No. 2021-03 | U.S. Department of Labor ( regarding their enforcement policy of the Broker Compensation Disclosure under ERISA section 408(b)(2)(B). Section 202 of Title II of Division BB of the Consolidated Appropriations Act.

The new disclosure requirements apply to persons who provide “brokerage services” or “consulting” to ERISA-covered group health plans who reasonably expect to receive $1,000 or more in direct or indirect compensation in connection with providing those services.

The required disclosures are intended to provide the responsible plan fiduciary with sufficient information to assess the reasonableness of the compensation to be received and potential conflicts of interest that may exist because of a covered service provider receiving indirect compensation from sources other than the plan or the plan sponsor. 

Among the more interesting items in the new guidance is that the DOL is not issuing any more regulatory guidance for the time being. 
In addition, the bulletin addresses the following:

  • If a good faith and reasonable effort is made by the covered service provider to disclose their compensation, the DOL will not treat the person as failing to comply to make disclosure. 
  • The plan fiduciary is also granted some relief in reporting failures of the covered service provider to disclose. 
  • Guidance reiterates that it is applicable to both fully insured and self-funded group health plans as well as dental and vision plans. Also, this regulation applies to all-sized groups.
  • “Covered Services Providers” are not just brokers and/or consultants. Service providers have considerable discretion over how they describe and market their services and label their fees. Sometimes, there are third-party vendors who bundle services
  • In situations where the covered service provider does not know the compensation amount in advance, the DOL reiterates that compensation may be disclosed as a monetary amount, formula, or a per capita charge for each enrollee or, “if the compensation cannot reasonably be expressed in such terms, by any other reasonable method, including a disclosure that additional compensation may be earned but may not be calculated at the time of contract if such a disclosure includes a description of the circumstances under which the additional compensation may be earned and a reasonable and good faith estimate if the covered service provider cannot otherwise readily describe compensation or cost and explains the methodology and assumptions used to prepare such estimate.”
  • The DOL will not be issuing any type of model form or directions on how disclosure of all possible components is done.

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