Good morning and Happy New Year from your Council Washington team. It was in the high 60s yesterday, and today we’re under a half foot (and counting) of snow. As you know, the new health plan compensation transparency regime was activated effective December 27, and late last week the Labor Department released a bulletin announcing its enforcement policy for the time being. With thanks to our Steptoe & Johnson legal team, we’ve outlined these provisions below. As you know, we have been significantly engaged with Labor Department officials urging good-faith enforcement, and the guidance issued is consistent with how we have asked the regulators to proceed. Those conversations will continue.
As for the big picture in D.C., we expect little constructive action on the Hill this week. The House is out of session all week, and the Senate is scheduled to convene tonight (questionable with the snowstorm) to determine paths forward on voting rights legislation as well as reimagining of Build Back Better provisions that have stalled out amid opposition from Sen. Joe Manchin. As our friends at Punchbowl News this morning put it:
“On BBB, the real action will be behind the scenes as the White House and Senate Democratic leadership tries to figure out just what Manchin is willing to do on both priorities. Remember, Manchin has said that the BBB as currently constructed is dead. However, that doesn’t mean that none of the $1.7 trillion package is salvageable. There are policies in the bill that Manchin can support, and that will be where the action is over the next few weeks or even months.”
We hope 1-1 renewals are going well, we look forward to working with you and your firms throughout this consequential year.
SVP, Government Affairs
New DOL Guidance on Broker Compensation Disclosures
On December 30, 2021, the Department of Labor (DOL) posted a Field Assistance Bulletin that outlined its temporary enforcement policy for the transparency requirements for brokers and consultants for group health plans as outlined in the Consolidated Appropriations Act of 2021. The guidance included in the bulletin is consistent with the suggestions in The Council’s Compliance Outline and it addresses enforcement questions that The Council discussed with the DOL in July 2021.
Notably, the DOL clarified that it “will not treat that person as having failed to make required disclosures to a responsible plan fiduciary under ERISA section 408(b)(2)(B) as long as the person made disclosures in accordance with a good faith, reasonable interpretation of ERISA section 408(b)(2)(B).”
In the bulletin, the DOL also notes that it will consider following the 408(b)(2) retirement plan disclosure guidance in implementing the 408(b)(2)(B) group health plan disclosure requirements to be a “good faith, reasonable interpretation” of 408(b)(2)(B) at least for now.
The DOL’s guidance also notes:
- That the requirements apply to both insured and self-insured plans as well as to stand-alone limited scope dental and vision products.
- That it considers any contract between the plan (or on behalf of the plan) and the broker or consultant to have been “executed” prior to December 27, 2021 if there was a contractual arrangement in place prior to the effective date. This de-emphasizes the importance of whether there was any formal “execution” of that contract by the plan or on behalf of the plan. For broker of record (BOR) letters, the DOL considers the applicable “execution” date to be the earlier of the date on which the BOR was done or the date on which the underlying coverage for that BOR was bound.
- That using estimated compensation ranges is an acceptable approach, for now. Then, the DOL cites its retirement plan guidance to note the applicable constraints:“However, such ranges must be reasonable under the circumstances surrounding the service and compensation arrangement at issue. To ensure that covered service providers communicate meaningful and understandable compensation information to responsible plan fiduciaries whenever possible, the Department cautions that more specific, rather than less specific, compensation information is preferred whenever it can be furnished without undue burden.” See 77 FR 5632, at 5645.
The DOL stated that it is not obligated to issue formal regulations under the statute and it intends to monitor the implementation of the new requirements before deciding whether to issue anything further.
We will keep you posted on any key developments. For questions, please reach out to Katie.Oberkircher@ciab.com.