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DOL Releases Long-Awaited Guidance on Health Insurance Compensation Disclosure Requirements

Section 202 of the December 2020 omnibus government funding legislation signed into law by former President Donald Trump included new compensation disclosure requirements for health insurance agents and brokers. The requirements took effect on Dec. 27, 2021.

After the requirements took effect last week, the Department of Labor (DOL) released Field Assistance Bulletin No. 2021-03, which provides further guidance and announces the DOL's temporary enforcement policy for group health plan service provider disclosures under ERISA section 408(b)(2)(B).

The Big “I" worked with outside counsel to produce a FAQ document and sample disclosure form, which includes the new guidance from DOL. In consultation with the Big “I" Government Affairs and Big “I" Office of General Counsel staff, these documents were prepared by Brad Campbell, a partner at the law firm of Faegre, Drinker, Biddle & Reath LLP and former Assistant Secretary of Labor for Employee Benefits.

Previously, the Big “I" hosted a webinar that discussed the disclosure requirements with Campbell. All the Big “I" documents related to the disclosure requirements can be found on the association website.

Some of the most notable elements from the recent DOL guidance include:

  • The bulletin suggests that agents and brokers will have flexibility in how they comply. It states that DOL will not consider a person to have failed to comply with the new requirements as long as the disclosures are made “using a good faith, reasonable interpretation of the law."

  • The bulletin notes that a “significant goal" of the new rules is the disclosure of compensation received from sources other than the plan itself. DOL notes on numerous occasions that it is especially concerned with the disclosure of any fees that may be paid by an agent or broker to an entity for referring group health plan clients.
  • The bulletin makes clear that the disclosure mandates apply to group health plans, regardless of size; self-insured group health plans; and limited-scope dental and vision plans.

  • DOL also addressed questions concerning how an agent or broker might disclose compensation amounts that are not known at the time the disclosure is made, such as contingent compensation and certain forms of non-monetary compensation. The bulletin notes that the law provides “considerable flexibility" to those disclosing their compensation and expresses DOL's view that “disclosure of compensation in ranges may be reasonable in circumstances when the occurrence of future events or other features of the service arrangement could result in the [agent or broker's] compensation varying within a projected range." The use of such ranges to disclose compensation must be reasonable, however, and DOL notes its preference for “specific, rather than less specific compensation information."
  • At least for now, DOL will not be developing a model form or providing specific directions on how these disclosure notices must be provided but additional guidance could be issued in the future.

About the author

Wyatt Stewart is Big “I" assistant vice president of federal government affairs. Wes Bissett is Big “I" government affairs senior counsel. Eric Lipton is senior counsel in the Big “I" Office of General Counsel.