Broker Compensation Disclosure: Do You Get Yours Every Year?

Your Broker Gets Paid. Do You Know How Much?

Most employers don't. They sign the renewal, the broker keeps the relationship, and the money flows in ways that never get explained. That's the problem the Consolidated Appropriations Act set out to fix.

The CAA broker compensation disclosure rules apply to any contract executed, extended, or renewed on or after December 27, 2021. If you've had a renewal since late 2021, this law applies to you. The DOL's 2023 FAQs on CAA broker compensation disclosure (ACA Part 56) confirm you have a right to this information before you sign anything. Not only do you have a right to know how much your broker stands to earn, it's your fiduciary obligation to know.

What the Law Requires

The disclosure isn't just a dollar figure. Per the DOL's 2023 FAQs on CAA Part 56, there are nine specific types of information required. That includes a description of services, whether the broker is acting as a plan fiduciary, all direct compensation, and all indirect compensation including vendor-to-brokerage incentive structures not solely tied to your contract.

That last part matters. A broker might earn a flat commission from your carrier. They might also earn override payments, bonuses, or trip credits from that same carrier based on total book volume. Both have to be disclosed.

The disclosure has to come in advance, before the contract is signed. The disclosure rules overview is clear: the plan fiduciary must be able to review it before the effective date of the contract, renewal, or extension. Not after. Not during open enrollment. Before.

What to Actually Request

Don't accept a vague summary. AgencyBloc's compliance guide outlines the specific data elements you need: coverage type, carrier, policy number, commission received, total policyholder commission, and a projection table. Get all of it in writing.

Ask specifically about indirect compensation. The CAA requires disclosure of any compensation from a vendor to a brokerage firm based on any incentive structure, not solely related to your plan.

Your broker's carrier preference might be influenced by factors that have nothing to do with your employees. That's exactly what this disclosure is designed to surface.

Also know this: if compensation changes mid-year, your broker is required to notify you. The update must come as soon as practicable, but no later than 60 days after the broker learns of the change.

How to Evaluate Whether the Fees Are Reasonable

The law doesn't cap what a broker can earn. It requires you, as the plan fiduciary, to determine whether the compensation is reasonable relative to services provided.

Documenting that process is how you protect yourself. The DOL's 2023 CAA Part 56 FAQs identify the core fiduciary review steps before every renewal: confirm a complete written disclosure exists, review it carefully for indirect compensation, and assess whether total broker compensation is reasonable while documenting that review.

What does reasonable look like? It depends on your headcount, plan complexity, and what services your broker actually delivers. A broker earning $150 per employee per year while managing a self-funded plan, running RFPs, and providing ongoing compliance support is a different situation from one collecting the same fee to forward a carrier invoice once a year. You need to know which one you have.

And don't assume evergreen contracts are exempt. The DOL's 2023 FAQs confirm that contracts extending beyond the employer's plan year still require reasonable re-disclosure. "Set it and forget it" doesn't apply here.

This Is a Fiduciary Issue, Not a Courtesy Request

You're not asking your broker a favor when you request this disclosure. You're fulfilling your legal obligation as a plan fiduciary. If your broker resists, delays, or delivers something incomplete, that tells you something important about how they view your relationship.

A broker who operates transparently has nothing to hide.