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Required Reporting of Indirect Compensation to Brokers

Dec 16, 2009

New rule requires reporting of indirect compensation to brokers

Revised U.S. Department of Labor regulations (72 FR 64710, 64712) require employee benefits plans to report indirect compensation obtained by those who provide services to plans on Form 5500. Aetna must furnish plans with information they need to comply with the revised rule.

How the new rule affects brokers, plan sponsors and Aetna
As the new rule applies to brokers, this means that Aetna's reporting to plans will now include the value of occasional meals, gifts, sporting event tickets and similar items Aetna provides to brokers and consultants. This reporting is in addition to the monetary commission and bonus/override compensation Aetna currently provides for Schedule A reporting.

This rule applies to both fully insured and ASO ERISA plans with 100 or more participants. There are dollar thresholds for this additional reporting:
Tracking and reporting timing
Aetna will track this information for expense events starting on January 1, 2010. Actual reporting of this information to plan sponsors will begin in early 2011.

Qualification for the reporting threshold will be at the broker/consultant office level (each office location is measured against the threshold). The allocation of the expenses will be tied to an individual plan sponsor if the event was specific to the plan sponsor. Otherwise, the reporting allocation of the expenses will be across the broker/consultant’s office book of business on pro rata basis.

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