Health Plan Fee Disclosure in 2026: What Plan Sponsors Are Now Responsible For

For most of ERISA's history, fee transparency was a retirement plan conversation

For most of ERISA's history, fee transparency was a retirement plan conversation. Group health plan sponsors operated with far less visibility into what their service providers were paid, by whom, and for what. That gap closed in 2021, and it has continued to narrow since. The result is a set of obligations that many benefits committees are still absorbing — and a distinction that matters more than the rules themselves: the difference between receiving a disclosure and acting on one.

What the disclosure rules require

The Consolidated Appropriations Act, 2021 extended ERISA Section 408(b)(2)'s service provider fee disclosure framework to group health plans. In practical terms, a broker or consultant who reasonably expects to receive $1,000 or more in direct or indirect compensation in connection with services to an ERISA-covered group health plan must provide written disclosure to the responsible plan fiduciary before the arrangement is entered into, extended, or renewed.

The scope covers medical, dental, vision, pharmacy, and other ERISA welfare benefit arrangements. Subsequent amendments have widened the perimeter. Where the original provision reached brokers and consultants, the disclosure obligation now extends considerably further into the vendor chain — meaning a broader set of service providers may owe the plan fiduciary a compensation disclosure than was the case a few years ago.

Indirect compensation is where the substance lives

Direct compensation is straightforward. The plan or plan sponsor pays the provider; the amount is visible on an invoice. Indirect compensation is the harder category, and it is where most plan sponsors discover things they had not accounted for. It includes:

• Override commissions paid by carriers

• Volume-based bonuses tied to book of business

• Marketing or administrative allowances

• Consulting fees paid by carriers or vendors rather than by the plan

• Compensation for referring the plan to a TPA, PBM, wellness vendor, or point solution.

None of these arrangements are improper. They are common, longstanding, and often disclosed without controversy. But a plan fiduciary cannot assess whether total compensation is reasonable without knowing what total compensation is — and total compensation frequently includes amounts that never appear on anything the plan sponsor writes a check for.

The obligation is evaluation, not receipt

This is the point most often missed, and it is worth stating plainly. Section 408(b)(2) is a prohibited transaction exemption. The arrangement between a plan and a service provider is exempt from the prohibited transaction rules only if the services are necessary and the compensation is reasonable.

Disclosure is the mechanism that makes reasonableness assessable. It is not the standard itself. So a benefits committee that files every disclosure it receives, unread, has satisfied a paperwork step and none of the underlying duty.

The fiduciary obligation is to obtain the disclosure, evaluate whether the compensation is reasonable in light of the services provided, document that assessment, and continue monitoring the arrangement over time. Reasonableness is a comparative standard. It cannot be assessed in isolation.

Concluding that a broker's compensation is reasonable requires knowing something about what comparable services cost in the current market — which means benchmarking data, a competitive process, or both.

Why this is drawing litigation attention

Health and welfare plan fiduciary litigation has grown notably, and the allegations follow a recognizable structure. Recent complaints have asserted that plan sponsors:

• Permitted brokers and consultants to receive excessive fees and commissions

• Failed to benchmark premiums or monitor loss ratios

• Did not meaningfully evaluate carrier or vendor selection

• Allowed dual compensation structures to operate without scrutiny PBM arrangements have drawn particular focus, given the share of plan spend that prescription drug benefits represent.

The common thread is not that the vendors did anything unlawful. It is that the plan sponsor cannot demonstrate having evaluated anything. Absence of process is the vulnerability.

Building a defensible file

A benefits committee that wants to be able to explain its decisions should be able to produce five things for any material vendor relationship.

• The disclosures themselves. Complete, current, and covering direct and indirect compensation. If a disclosure is vague — "commissions vary by carrier" — request specificity. A disclosure that cannot support an evaluation has not accomplished its purpose.

• Evidence of assessment. A memo, a benchmarking report, or minutes reflecting that the committee compared compensation to something external and reached a conclusion.

• Written evaluation criteria. Ideally dated before proposals were reviewed. Criteria established in advance demonstrate an objective process; criteria assembled afterward demonstrate a justification.

• The comparison set. Who else was considered, and why they were not selected. A file containing one option and one decision does not show an evaluation occurred.

• Ongoing monitoring. Selection is a single event. Oversight is a continuing duty. A file that ends at the contract signature date describes a committee that stopped paying attention.

  Practical next steps

For most benefits committees, the useful starting point is inventory rather than action. Identify every service provider reasonably expected to receive $1,000 or more in connection with the plan. Confirm which have provided compensation disclosures and which have not.

For those that have, determine whether anyone actually reviewed the document and whether that review is recorded anywhere. That exercise usually surfaces two categories: relationships where the documentation is adequate, and relationships where a disclosure was received and quietly filed. Neither result is a crisis. Both are useful to know before someone else asks.

The expansion of health plan fee disclosure is not primarily a compliance burden. It is a shift in what plan fiduciaries are expected to be able to explain. The rules now assume that a plan sponsor knows what its service providers are paid and has formed a view about whether that compensation is reasonable for the services delivered.

Meeting that expectation does not require replacing vendors or overhauling a benefits program. It requires obtaining complete information, comparing it to the market, writing down what the committee concluded, and revisiting the question periodically.

That is an ordinary standard of care. The plans that struggle are rarely the ones that made poor decisions. They are the ones that cannot show how any decision was made at all. Internal links Health benefit broker evaluations service page; Compensation transparency reviews service page; prior post on vendor monitoring

If your committee has not reviewed a broker or vendor compensation disclosure in the past twelve months, that is a reasonable item for your next agenda.

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