Insurance commission transparency law kicks in Monday but questions remain

A new law directing health insurance companies, agents and brokers to disclose their commissions goes into effect Monday, though there still is uncertainty about how to comply. 

The penalty for noncompliance could be $100 a day based on rules established under the Employee Retirement Income Security Act, though the federal government hasn’t explicitly said so, says Ronnell Nolan, the Baton Rouge-based president and CEO of Health Agents for America. 

Nolan says Department of Labor officials have told her the law duplicates a similar rule for the financial industry, “so we can somewhat copy what they’re doing.”

“But it’s not really apples-to-apples,” she says. “It’s kind of apples to oranges, the financial industry and the health insurance industry.”

ERISA already requires compensation to plan service providers to be “reasonable.” The Consolidated Appropriations Act of 2021 requires that group health plans disclose compensation of $1,000 or more to any broker or consultant. Failure to do so would mean that the contract is not deemed reasonable, according to the Society for Human Resource Management. 

Nolan is hoping for further guidance from the federal labor department. In the meantime, her organization has worked with a law firm to create a disclosure form to comply with the law that can be tweaked later if necessary, she says.