The Truth About Benefits Broker Compensation
As we continue the conversation around rising health insurance costs, it’s important to shine a light on a player that doesn’t always get enough scrutiny: employee benefits brokers and consultants (yes, we’re talking about ourselves here!)
Let’s start with this: the vast majority of benefits brokers and consultants — just like providers, insurers, and TPAs — are working hard to do the right thing. They’re evaluating the market, negotiating on behalf of employers, and trying to drive value for organizations and the employees and families who depend on those benefits.
But as in any industry, there are outliers.
WATCH: The Truth About Benefits Broker Compensation
The Growing Focus on Transparency
In recent years, the federal government has increased its focus on transparency and accountability in employee benefits. The Consolidated Appropriations Act (CAA) expanded disclosure requirements and strengthened fiduciary expectations for advisors and employers alike.
Many employers may not realize that these changes weren’t just about carriers and pharmacy benefit managers. They also apply to consultants and brokers, particularly around compensation transparency and potential conflicts of interest.
In other words: the days of “trust us, it’s built into the premium” are over.
The Lawsuits That Sparked Concern
A recent high-profile lawsuit brought by Schlichter Bogard has drawn attention to alleged broker compensation practices at some large global firms. The lawsuit alleges that certain employee benefit products carried commissions as high as 45% of premium.
If proven true, that level of compensation raises serious concerns… not only from an ethical standpoint, but from a fiduciary one.
Why This Matters for Employers
Most employers who sponsor health and welfare benefit plans carry fiduciary responsibilities under federal law. That responsibility includes acting prudently and solely in the interest of plan participants.
What does that mean in practice?
It means:
Regularly reviewing broker and consultant compensation
Demanding full disclosure of all direct and indirect payments
Benchmarking fees against market standards
Ensuring advisor incentives align with your organization’s goals — not product commissions
Fiduciary responsibility isn’t passive. It requires vigilance.
Allowing excessive or undisclosed compensation arrangements could expose employers to legal risk. But beyond legal exposure, it undermines trust and ultimately diverts dollars away from employee care.
The Right Questions to Ask
Employers should feel empowered to ask their employee benefits broker:
How are you compensated?
Are there contingent or volume-based bonuses?
Do you receive overrides or revenue sharing from specific carriers?
How do you ensure your recommendations are independent and objective?
A strong advisor should welcome these questions.
The Bottom Line
Stay informed. Ask hard questions. Insist on transparency.
That’s how employers protect their organizations and the people who rely on them for access to care.
Health benefits are one of the largest investments most employers make. Oversight isn’t optional. It’s part of the job.
And when incentives are aligned and transparency is real, everyone wins!