OneDigital Benefits Compliance Consulting

Main Provisions:

Summary

Modifies ERISA to add a disclosure requirement of direct or indirect compensation by brokers or consultants if they:

No contract or arrangement, or its renewal, for services between a covered plan and a covered service provider is reasonable within the law unless transparency of fees is provided in advance of the effective date.  

All insurance brokers and consultants, their affiliates, or subcontractors

Applicability

Responsibility

All brokers and consultants must provide the disclosure notice

Consequences

Plan fiduciaries must report brokers/consultants to the DOL for failure to comply and if not remedied by the broker or consultant, must terminate the agreement.

Implementation

The law requires rulemaking for the individual market not later than 1 year after the date of enactment of the CAA, or 12/27/21, shall finalize, through notice-and-comment rulemaking, the timing, form, and manner in which issuers must provide disclosures for new and renewals.  

We may receive additional FAQs or guidance from the DOL regarding broker/consultant compliance for group health plans.    

This does not apply to a contract or agreement executed prior to 12/27/21.

Definitions:

Applicability (main definitions included here for clarity)

Group plan (under ERISA) means an employee welfare benefit plan to the extent that the plan provides medical care (as defined in paragraph (2) and including items and services paid for as medical care) to employees or their dependents (as defined under the terms of the plan) directly or through insurance, reimbursement, or otherwise. Such term shall not include any qualified small employer health reimbursement arrangement (as defined in section 9831(d)(2) of title 26). (QSEHRA)

Compensation means anything of monetary value, but does not include non-monetary compensation valued at $250 (or such amount as the Secretary may establish in regulations to account for inflation since the date of enactment of the Consolidated Appropriations Act, 2021, as appropriate) or less, in the aggregate, during the term of the contract or arrangement

Covered plan means a “group health plan” as defined section 733(a) – see “group health plan” definition above

Covered service provider means a service provider that enters into a contract or arrangement with the covered plan and who reasonably expects $1,000 (or such amount as the Secretary may establish in regulations to account for inflation since the date of enactment of the Consolidated Appropriations Act, 2021, as appropriate) or more in compensation, direct or indirect, to be received in connection with providing one or more of the designated services      

Direct compensation means compensation received directly from a covered plan 

Indirect compensation means

Indirect compensation means compensation received from any source other than the covered plan, the plan sponsor, the covered service provider, or an affiliate.        Compensation received from a subcontractor is indirect compensation, unless it is received in connection with services performed under a contract or arrangement with a subcontractor

Disclosure:

Content Elements

Compensation may be expressed as a monetary amount, formula, or a per capita charge per enrollee, or, if it can’t be reasonably expressed as such, then by another reasonable method

Services to Include in Disclosure:

Designated Services

Brokerage services:

Consulting services:

Acceptable type of Disclosures

A description of compensation or cost may be expressed as;