On Monday, July 26, NAIFA and our industry partners, The Council of Insurance Agents & Brokers and the Independent Insurance Agents & Brokers of America, sent a letter to the U.S. Department of Labor requesting an initial non-enforcement period for Section 202 of the No Surprises Act.
The No Surprises Act was enacted on December 20, 2020. Section 202 of the No Surprises Act requires NAIFA members to describe their direct and indirect compensation to employer-sponsored health plans, introducing a notable compliance challenge for agents and brokers: how to accurately describe any contingent compensation (a small portion of indirect compensation that typically amounts to less than one percent of premiums) they may receive in connection with brokerage or consulting services provided.
Creating and implementing a comprehensive disclosure framework for the disclosures required under Section 202 of the No Surprises Act has proved to be a complex undertaking, and it is unlikely that these frameworks will be ready by the effective date.
Because of the regulatory burdens being placed on our members, NAIFA along with its industry partners has requested that the Department of Labor consider a staged enforcement policy that will allow our members to implement the systems necessary to comply with the disclosure requirements while also being able to provide the direct and indirect compensation information that is readily available to them (e.g., fees and commissions per plan participant) as well as describing other sources of compensation to the extent possible.
Should the Department of Labor act on the recommendation for an initial non-enforcement period, our members – the majority of whom do not have access to the legal resources of larger enterprises that may help to provide clarity on the regulations implemented under this act – would provide information that addresses the majority of compensation that producers receive for the brokerage and consulting services they provide to plans for the estimated 12 to 18 months after the effective date it would take to develop a system for disclosures that meet all of the requirements of the law.