Wrangle, an Ascensus company, provides health and welfare Form 5500 and ERISA Plan Document services. When updates occur that alter the existing regulations under a group’s health plan, their vendors report benefits or establish plan documents. We help our clients and
broker partners stay informed.
Regulatory changes have been occurring at a rapid pace in recent years, and one such notice is the newly applicable “reasonableness” requirements related to disclosures of fees and compensation. ERISA Section 408(b)(2) of the statute now applies to group health plans.
On December 27, 2020, the Consolidated Appropriations Act, 2021 (CAA) was signed into law. It amended ERISA Section 408(b)(2) to require disclosure of direct and indirect compensation received by brokers and consultants of group health plans to plan fiduciaries. This guidance is intended to assist plan fiduciaries to determine whether a service is necessary, and if the compensation is reasonable. The disclosure requirements imposed by the CAA apply to any contract executed, extended, or renewed on or after December 27, 2021.
If a covered service provider (a broker or consultant) fails to provide disclosure about direct and indirect compensation, any compensation collected by the broker or consultant will be considered unreasonable and if paid from plan assets, may be required to be reimbursed to the affected group health plan.
Our expectation is that you, as a broker, or consulting partner for your clients, will be taking steps to comply with ERISA Section 408(b)(2). If you have questions or need data from us to fulfill your requirements, please reach out to Lynda Taylor, your Wrangle Vice President, at ltaylor@wrangle5500.com. Please note we do not serve as a licensed broker or consulting agency.
Thank you for your partnership!
Wrangle Services
Wrangle will support our partners in meeting the disclosure requirement by providing pricing and service information to partners upon request, and to our direct plan sponsor clients by December 2021. Our partners may always reference our existing Service Agreement for service descriptions and associated fees.
Terms You Should Know
Group Health Plans – Any group health plan, specifically excluding qualified small employer health reimbursement arrangements (“QSEHRAs”). Includes major medical, dental, vision, health FSA, health reimbursement arrangements, employer payment plans, etc.
Covered Service Provider – A service provider that enters into a contract or arrangement with a group health plan, and that reasonably expects to receive $1,000 or more indirect compensation from the plan or plan sponsor, or indirect compensation from a third party that is not the plan, the plan sponsor, or the covered service provider (and any affiliate or subcontractor) in connection with providing either brokerage or consulting services or both.
For questions and concerns:
Please contact Lynda Taylor, Vice President at ltaylor@wrangle5500.com.