[Infographic] The Broker Compensation Disclosure & How to Comply

Table of Contents

• What Is the Broker Compensation Disclosure?
• Using Technology to Help You Stay Compliant With the Broker Compensation Disclosure
• How to Manage Broker Compensation Disclosures in AgencyBloc

What Is the Broker Compensation Disclosure?

If there is one thing you can always count on in the health insurance industry, it’s that changes will happen. The broker compensation disclosure requirement is no different.

In December 2021, the Consolidated Appropriations Act (CAA) launched new disclosure requirements for group health plans, individual brokers, and consultants. These plans specifically require brokers and consultants to disclose their compensation to plan sponsors if they anticipate earning $1,000 or more in direct or indirect compensation. The anticipated earnings include “all forms of compensation, including standard ongoing compensation, bonuses, finder’s fees, prepaid (advanced) commissions, payments made by third parties, incentive programs not solely related to the plan, etc.”

This requirement includes any new, extended, or renewed plan that goes into effect on or after December 27, 2021.

As part of this requirement, you must disclose the following:

• Description of services to be provided
• Statement of who (you/affiliate/subcontractor) is providing services to the plan fiduciary
• Description of direct compensation
• Description indirect compensation
• Description of compensation on a transaction basis (commissions, finders fees, incentives)
• Description of compensation for termination of the contract and prepaid amounts

All group benefits insurance agencies need to comply with this requirement. Therefore, it’s crucial to store your client and commission data in a way that helps you get the information you need when you need it. 

For more information on the Broker Compensation Disclosure, check out these resources:

• NABIP
• Employee Benefits Security Administration
• Savoy
• Amwins Connect

Using Technology to Help You Stay Compliant With the Broker Compensation Disclosure

All employee benefits insurance agencies that anticipate selling or renewing qualifying plans must comply with this federal regulation and, thus, need an efficient way to do so. There are two main ways to gather the information and disclose it.

Manually

Manually tracking your upcoming sales that will qualify for the disclosure requires you to create your own disclosure letter and manually manage client accounts to ensure you issue the disclosure promptly to the correct client. Your company could adopt this option. However, depending on the size of your book of business and the number of policies you have that qualify for this disclosure, this task could quickly become time-consuming. Plus, it opens you up to potential errors and missing clients that qualify.

Using an Agency Management System (AMS)

Using an insurance AMS, like AgencyBloc's AMS+ solution, your process could be more efficient. An AMS can:

• Quickly identify upcoming sales and renewals that will require a disclosure
• Provide a downloadable report with the exact information you need to fill out the disclosure form
• Help you stay on track with notifications and reminders to issue the disclosure at the right time
• Centralize your client paperwork and create a digital paper trail that you can refer back to and trust

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How to Manage Broker Compensation Disclosures in AgencyBloc

Step One

Educate yourself on the disclosure guidelines and view an example disclosure form. Stay informed by accessing resources and materials in AgencyBloc that help you stay compliant.

Step Two

Use automation to set reminders for your team to disclose and make it a part of your sales process. For new contracts, use Automated Workflow in AMS+ to automatically create an activity, or to-do, when an individual’s status changes to prospect, for example. Renewals can use the same process, except you can schedule the activity to notify you a certain number of days (i.e., 60 days) in advance.

Step Three

Use commission tools to identify customers who require a disclosure; run the report and complete the form. AgencyBloc’s commissions processing solution, Commissions+, has preset reports that tell you who in your customer base will most likely need a disclosure.

Once you know which customers need to complete the form, send an email with the form for them to fill out. If you’re having trouble coming up with what to say, here’s an example email you can take and use immediately:

Step Four

Record and track disclosure activity within the client’s profile to centralize information. Attach necessary documents (email, completed form, etc.) within AMS+ that shows you sent the disclosure to your client. If you ever need to reference it or for an audit, you know exactly where to find it.

AgencyBloc’s Broker Compensation Disclosure Report

AgencyBloc is the #1 Recommended Insurance Industry Growth Platform serving health, benefits, and senior insurance agencies, GAs, IMO/FMOs, and call centers. In an effort to provide our clients with the tools they need to be successful, we have a built-in Broker Compensation Disclosure Report. This report identifies which of your clients need to receive the compensation disclosure and brings together the data you need to fill out your compensation disclosure form.

In the report, you’ll see the following data:

Then, in the report, you can look at the Total Policyholder Commission Received column to identify policyholders that qualify for the disclosure.

Centralizing your client and commission data gives you better visibility so that you can more accurately track which clients qualify for the disclosure and when they received the disclosure from you.

Broker Compensation Disclosure Quick Answers

1. Who needs to receive a broker compensation disclosure?
Any plan sponsor (typically groups) for which the broker expects to earn $1,000 or more in total compensation—direct or indirect—must receive one.

2. What information must the disclosure include?
You need to detail services provided, the service provider’s identity, direct and indirect compensation, transaction-based payments (like commissions or finder’s fees), prepaid amounts, and compensation tied to contract termination.

3. When should disclosures be sent?
Disclosures must be issued in advance of selling, renewing, or extending any qualifying plan set to go into effect on or after December 27, 2021.

4. Can I handle disclosures manually?
Yes—but managing them manually requires tracking upcoming plans, producing forms, sending reminders, and storing signed copies—prone to errors and time-consuming without automation.

5. How can an AMS help?
An agency management system can automatically flag qualifying clients, generate reports, schedule reminders, manage distribution of disclosure forms, and securely store completed records—all from one platform.

How to Manage Broker Compensation Disclosures Using AgencyBloc

Commissions+ gives you a complete view of your incoming compensation and provides the information you need to process, track, and disclose appropriately. Once you’ve issued the disclosure, add a copy to AgencyBloc’s industry-specific CRM that is date- and time-stamped to create a trusted digital paper trail.

Use Automated Workflow to assign a task to the person on your team who issues the disclosures. Once the task is completed, that information is reflected in the client’s record for additional auditing and process management.

Having these steps in place means that you’re staying ahead of the process and never missing a thing. Plus, you’re staying compliant and doing your due diligence to take care of your clients and provide them with an optimal level of service. This allows you to add more value to your new and existing client relationships, improve your retention rate, and increase the chance of cross-selling.

Posted by Sarah Rosonke on Thursday, February 20, 2025 in Commissions+

1. commissions
2. data management
3. productivity