CAA Compensation Disclosure Requirements

The No Surprises Act and the Compensation Disclosure Form require that agents, brokers, and consultants must indicate whether or not they are acting in a fiduciary role while providing covered services to their clients. 6 ERISA Section 3(21) provides that an individual acting as a fiduciary is generally someone who exercises any discretionary authority or control regarding the management of an employee benefit plan or the disposition of its assets. 7

Generally, one who provides broker and general consultative services to an ERISA group health plan are not viewed as a fiduciary under ERISA. 8 However, if an individual agent, broker, or consultant exercises discretionary control over plan assets and/or discretionary control over the administration of the plan as part of their services, then the agent, broker,

or consultant could be said to be acting in a fiduciary capacity. 9

See Q5 and Q6 for the definition of covered brokerage services and covered consultant services. 10

Brokerage covered services include: the selection of health insurance products (including dental and vision), recordkeeping services, medical management vendors, benefits administration, stop-loss insurance, pharmacy benefit management services, wellness services, transparency tools and vendors, group purchasing organization preferred vending panels, disease management vendors and products, compliance services, employee assistance programs, or third-party administrators. 11

Consultant covered services include services listed under Q5, plus the addition of services related to the development or implementation of plan design. 12

The following information must be disclosed:

• A description of the services to be provided to the plan pursuant to the contract or arrangement.

• If applicable, a statement that the agent, broker, or consultant (or affiliate or subcontractor) expects to provide services pursuant to the contract or arrangement to the plan as a fiduciary.

• A description of all direct compensation that the agent, broker, or consultant (or affiliate or subcontractor) reasonably expects to receive for the services provided. o A description of all indirect compensation that the agent, broker, or consultant (or affiliate or subcontractor) reasonably expects to receive for the services provided. o A description of the arrangement between the payer and the agent, broker, or consultant (or affiliate or subcontractor) pursuant to which such indirect compensation is paid.

• Identification of the services for which indirect compensation will be received, if applicable, and identification of the payer of indirect compensation, if applicable. o A description, if applicable, of how compensation is shared among agents/brokers/consultants and affiliates or subcontractors.

• A description of any compensation that will be paid among agents, brokers, or consultants (or affiliates or subcontractors) in connection with services provided on a transaction basis (such as commissions or finder’s fees).

• A description of any compensation that the agent, broker, or consultant (or affiliate or subcontractor) reasonably expects to receive in connection with the termination of the contract or arrangement. 13

The compensation disclosure information must be provided in writing.14 While the statutory disclosure requirements do not define “writing” at this time, ERISA disclosure provisions suggest that a “writing” may also consist of an electronic means. 15

Absent further guidance, a position could be taken that the provision of the disclosure in an electronic format constitutes a “writing.” For example, an agent, broker, or consultant who emails a PDF version of the notice to their client would arguably satisfy the notice requirement. 16

As a best practice, the agent, broker or consultant providing such notice should keep a log of outgoing notices and the method of delivery. 17

You can disclose the amount Per Employee Per Month (PEPM) or provide the formula that is used to calculate your compensation. 18

For new or potential clients, disclosure must occur prior to entering into the contract or arrangement. 19

Yes. 20

No. Although group health plans offered by municipalities are not governed by ERISA, disclosures can be, but are not required to be, made as a precautionary measure. 21 That said, you should review the laws of the State or the municipality as they apply to your disclosure responsibilities.

No. AFLAC plans are not group plans. 22

No. ICHRAs are not group plans. 23

No. Only disclose the compensation you will receive for the services as defined above under Q5-Q6. 24

No. Only report commissions or other compensation that you will receive. 25

No. Only report commissions or other compensation that you will receive. 26

As currently written and absent additional guidance, no, each party has a non-delegable responsibility to report their commissions. 27

Therefore, absent additional guidance, a GA may not report the commissions or other compensation of the brokers it represents in lieu of each broker reporting their own commissions or other compensation. 28

Agents, brokers, and consultants are required to disclose their compensation information to the health plan fiduciary on a date that is reasonably in advance of the date on which the contract or arrangement was entered (or reasonably in advance of the contract’s extension or renewal date). 29

Generally, the agent, broker, or consultant should consider what a reasonable agent, broker, or consultant acting in good faith would do under the circumstances for the purposes of disclosing “reasonably in advance.” 30

If there are changes to the information that was disclosed reasonably in advance, then such changes must be disclosed as soon as practicable, but not later than sixty (60) days from the date on which the agent, broker, or consultant knows of such change. 31

If an agent, broker, or consultant acting in good faith and with reasonable diligence makes an error or omission with the disclosure, then the contract or arrangement may still be considered to be reasonable if the correct information is disclosed as soon as practicable, but not later than thirty (30) days from the date on which the agent, broker, or consultant knows of such error or omission. 32

Yes. 33

Yes. 34

Agents, brokers, or consultants must respond to any written request for disclosure information from the plan fiduciary within ninety (90) days.35

If the agent, broker, or consultant fails to respond within ninety (90) days, the plan fiduciary must submit a formal notice to the DOL within thirty (30) days to avoid a prohibited transaction from occurring, and the plan fiduciary must decide whether to terminate the contract or arrangement with the agent, broker, or consultant, consistent with ERISA’s fiduciary duty of prudence. 36

If the requested information relates to future services and is not disclosed within ninety (90) days, the plan fiduciary shall terminate the contract or arrangement with the agent, broker, or consultant as expeditiously as possible. 37