The Consolidated Appropriations Act of 2021 (the “CAA”) was signed into law on December 27, 2020, and includes several provisions impacting group health plans and health insurance issuers. Section 202 of the CAA amends Section 408(b)(2) of ERISA and creates new transparency requirements that impact group health plans and their brokers or consultants.
What is it? Specifically, group health plans must receive disclosures from brokers or consultants (or their affiliates or subcontractors) who reasonably expect to receive $1,000 or more (indexed for inflation) in direct or indirect compensation in connection with providing certain designated insurance-related services to the group health plan. The disclosures will include a description of the services, a description of direct and/or indirect compensation, including any finder’s fees. Alera Group’s disclosures will contain all components required under the CAA.
Is this new? The rule is new, but Alera Group and its companies have long provided our clients with transparent information about payment and fees. Going forward, this disclosure will take a more standard format and follow the timing rules of the CAA. We are, as always, happy to answer questions about our compensation.
When is this disclosure due? These rules go into effect for all contracts or covered services executed or renewed on or after December 27, 2021, and thereafter. The timing of your specific disclosure(s) will be dependent upon the placement or renewal dates of your policies.
Do you have to do anything? No, other than an acknowledgement you received the disclosure. You will have 10 days to sign off on the receipt and acknowledgement of the disclosure, but if you do not, it is deemed to be accepted after 10 days. Of course, if you have any questions about the disclosure Alera Group and its companies will answer any follow up questions you might have.
Will the dollar values match my 5500? Generally speaking, the compensation disclosure you receive will likely not align with Form 5500. The reason for this is that the disclosure form may not set forth specific compensation amounts, whereas Form 5500 will do so. In addition, Form 5500 will set forth more specific information about certain types of contingent compensation, which will not be captured in detail in your compensation disclosure form.
What happens if my plans or policies change, or the compensation Alera Group receives changes? During the year, Alera Group has 60 days to update the disclosure if needed. We must also provide, upon request from a plan fiduciary or administrator, “any other information relating to the compensation received in connection with the contract or arrangement.” Good faith errors and omissions in the disclosure will not be considered a violation if they are corrected within 30 days of Alera Group becoming aware of them.