Broker Compensation: Moving Toward Greater Transparency

The Consolidated Appropriations Act of 2021 (CAA), requires brokers who provide services to ERISA-covered group health plans to disclose their compensation. It also requires plan sponsors to obtain the information and assess its reasonableness. This is part of their fiduciary responsibilities to operate the plan in the best interest of its participants.

Disclosing before it was required

Transparency and integrity are part of the fabric of The Miller Group and always have been. My grandfather, Bob Miller, didn’t just start a business; he founded a community. Guiding us with a strong set of values and business ethics, he established a company that not only focused on the needs of the client but on the needs of his employees and civic responsibilities.

Following our founding values of doing what’s right for clients, we were disclosing compensation information long before the CAA. But the act does provide clarity about the timing and content of those disclosures. We’re waiting for the final regs and model statements. In the meantime, we’ve improved our disclosures and are sharing them at renewal time for each and every client. We hope this will help our clients have an even better understanding on which to base their decisions.

Leveling the playing field

We believe that what we charge is reasonable, fair and competitive. The Miller Group brings highly skilled, experienced professionals to your team, and we’re proud of the value we add for our clients.

We think the new rules will level the playing field by requiring all brokers to share the same level of detail about their compensation. That includes overrides, which can provide a huge disincentive for a broker to move a client away from a carrier. Clients will now see all overrides and bonuses, which should help them make better-informed decisions.

The Miller Group strives to place our clients with the carriers and products that best meet their needs. We don’t make carrier recommendations based on the amount we may receive in overrides or incentives.

Caution about fiduciary responsibility

A small caution for you: The CAA’s requirements place new responsibilities on both brokers and plan sponsors. If the plan’s fiduciaries don’t obtain the compensation disclosure information and determine whether the fees are reasonable, ERISA views the fees as NOT reasonable and can deem the contract a prohibited transaction. It’s important to designate your plan fiduciaries – typically the benefits committee. If you don’t, the members of your board of directors are the default fiduciaries, and you should make them aware.

We understand compensation can be an uncomfortable topic to discuss. But we’re ready and willing to talk it over with you at any time. Feel free to contact me or your producer with any questions.