Short answer: Under the Consolidated Appropriations Act, 2021, brokers and consultants must disclose in writing, before the employer signs the contract, all direct and indirect compensation they expect to receive in connection with a group health plan. It’s designed to surface conflicts of interest and help employers judge the value they’re getting.
The Consolidated Appropriations Act, 2021 (CAA) amended ERISA §408(b)(2) to extend a long-standing retirement-plan rule to group health plans. Brokers and consultants who expect to receive $1,000 or more in compensation must now give the plan sponsor a written disclosure, before the contract is signed, describing the services and all compensation they reasonably expect to receive.
“Compensation” includes both direct pay (commissions paid out of premium) and indirect pay (carrier overrides, bonuses, contingent compensation, and similar incentives). The point is transparency: an employer can’t evaluate whether a broker’s recommendation is in the company’s interest without knowing how (and by whom) the broker is paid.
For brokers, the disclosure is best treated as routine and trust-building rather than defensive: a plain-English explanation of how they’re paid, from what source, and that compensation doesn’t dictate their advice. For employers, it’s a tool to compare advisors and spot potential conflicts of interest.
Sources
- Consolidated Appropriations Act, 2021, §202; ERISA §408(b)(2) (broker/consultant compensation disclosure).
- Employee Benefits KB (Broker Practice & Compensation, disclosure).
Content history
Originally published: June 16, 2026
Last reviewed: June 16, 2026