Enhancing Transparency: New Disclosure Requirements for Agents and Brokers in Group Health Insurance
By Ron Friedman, Partner, Advisory & Assurance Services
The business health insurance industry has undergone a significant regulatory update that aims to improve transparency. A newly established rule mandates thorough compensation disclosure for agents and brokers involved in group health insurance plans. With a focus on ensuring that businesses are well-informed about the financial intricacies of their employee health benefits, these disclosures are now a legal requirement for plans exceeding a specified compensation threshold.
In recent developments concerning business health insurance administration, a key rule that affects the disclosure of agent and broker compensation has been established. This change stems from the “No Surprises” Section 202 of the Consolidated Appropriations Act, 2021 (CAA).
Specifically, the rule mandates that for any group health insurance plans accruing $1,000 or more in annual compensation for agents or brokers, these individuals must adhere to new disclosure requirements. These regulations are in effect for plan years beginning as early as 2022 and apply to businesses of all sizes offering their employees group health insurance coverage.
The disclosure rules now mirror those that apply to covered service provider disclosures to fiduciaries of retirement plans. Per the requirements, existing contracts with insurance companies should include these disclosures at each renewal. Businesses must proactively obtain these disclosures for the relevant plan years if they have not yet received them. Employers are advised to request this information from their insurance agents or brokers in writing.
Should the insurance agents or brokers fail to provide the requested disclosure information within 90 days following a written request, the employer is obligated to report this non-compliance to the Department of Labor within 30 days of the failure. The implementation of these disclosure requirements intends to bring greater transparency to the financial aspects of health insurance plans and ensure that employers are fully informed about the costs associated with the plans they offer to their employees.
In conclusion, implementing the new disclosure rule marks a significant stride towards greater transparency within the business health insurance industry. By aligning these requirements with those established for retirement plans, the rule ensures that businesses are equipped with crucial information about the financial dimensions of their health insurance offerings. It is imperative for employers to understand and actively engage in this process by securing disclosures from their agents or brokers, thereby safeguarding their interests and those of their employees. With this legislative change, the industry takes a substantial step forward in demystifying the cost structures of employee health benefits and reinforcing the principle of informed decision-making in corporate health insurance administration.
