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The Consolidated Appropriations Act 2021 requires broad fee disclosures from health plan consultants and brokers for all contracts entered into, extended, or renewed on or after December 27, 2021. Failure to obtain these disclosures and determine the reasonableness of compensation could be considered a breach of fiduciary duty for health plan sponsors. Despite this consequence, the Act does not require the Department of Labor to issue regulatory guidance on the disclosures, and DOL has indicated it does not intend to issue any formal guidance.
The department, however, did issue an informal bulletin late last year providing some guidance. The bulletin noted that DOL will not treat service providers as failing to make required disclosures as long as a disclosure was made based on a good faith, reasonable interpretation of the disclosure requirements. The bulletin pointed towards prior DOL guidance on pension plan fee disclosures as indication of good faith compliance. Finally, the bulletin clarified that the disclosure requirements are not limited to providers who are licensed as or who market themselves as “brokers” or “consultants.” Instead, the rules extend to any service provider who reasonably expects to receive indirect compensation from third parties in connection with advice, recommendations, or referrals regarding insurance products, recordkeeping, medical management, benefits administration, stop-loss insurance, pharmacy benefit management services, wellness services, transparency tools, purchasing organization agreements, disease management, compliance services, employee assistance programs, or third party administration services.