How to Audit Group Health Plan Fees and Broker Compensation

To audit group health plan fees, a Texas employer should reconcile the proposal, contracts, invoices and compensation disclosures before signing or renewing. Identify every recipient, calculation method and payment source, including amounts embedded in the premium. This is a contract-level review of administration, stop-loss, pharmacy and broker compensation, not a recommendation to cut employee benefits or treat deductibles as broker fees.

What belongs in the fee inventory?

A fee inventory should identify every proposed charge, who receives it, how it is calculated and whether it is already included in another amount. Match premium or funding, administration, stop-loss, pharmacy and broker compensation to written evidence. Keep conditional refunds separate from amounts the employer must pay.

Component	Questions to resolve	Evidence to request
Premium or monthly funding	Which claims, risk, administration and compensation components are bundled?	Rate sheet, funding schedule and contract
Administration/TPA	Per employee or member? Minimum, setup, termination or reporting charges?	Administrative services agreement and invoice
Stop-loss	Premium, commissions, exclusions, reimbursements and terminal coverage?	Policy, endorsements and compensation disclosure
PBM	Spread pricing, retained rebates, dispensing and specialty fees?	Pharmacy agreement, rebate definition and reconciliation reports
Broker/consultant	Direct fees, embedded commissions, bonuses, referrals or other indirect compensation?	Service agreement and written compensation disclosure

Record the payer, recipient, amount or formula, payment frequency, covered service, source document and whether each item is included or separately billed. PBM spread is the difference between the amount charged to the plan and the amount paid to the pharmacy; ask whether the contract permits it. Do not assume every arrangement uses spread pricing or passes through all rebates. In bundled insured products, ask which detail is available rather than inventing a premium breakdown.

What does the CAA require for broker compensation?

The CAA requires applicable compensation disclosures from covered brokerage or consulting providers to ERISA group health plans before the relevant arrangement is entered into, extended or renewed. Ask for the services, direct and indirect compensation, payers and calculation methods in writing, then use the detailed scope and timing rules below.

The Consolidated Appropriations Act, 2021 amended ERISA section 408(b)(2). Under DOL Field Assistance Bulletin 2021-03, brokerage or consulting providers to ERISA-covered group health plans who reasonably expect $1,000 or more in direct or indirect compensation must disclose the required information reasonably in advance of entering the arrangement. The requirements apply to covered contracts entered into, extended or renewed on or after December 27, 2021, including small plans and insured or self-insured plans. QSEHRAs are excluded from this group-plan definition; do not assume every employer benefit arrangement is covered.

Request the services, expected direct and indirect compensation, who pays it and how it is calculated. A formula or reasonable estimate can be appropriate when final compensation depends on enrollment or other variables. Ask about carrier bonuses, referral compensation and vendor relationships relevant to the services. A disclosure is not proof that a fee is reasonable; evaluate the services and potential conflicts.

How do you reconcile the documents?

Reconcile proposals by matching each charge to its contract, disclosure and invoice using the same census and coverage period. Identify bundled amounts before adding separate fees, and put different billing units on a consistent annual basis. Record unresolved terms and conditional credits instead of treating an incomplete proposal as final.

1. Use the same enrollment, effective date and coverage period for every proposal.
2. Match each contract charge to the invoice or embedded amount; do not add an included commission again.
3. Convert monthly, annual and per-member amounts to one comparable annual basis, documenting assumptions.
4. Separate fixed charges from variable claims costs and conditional rebates or refunds.
5. Obtain written answers to missing or inconsistent terms before approval and retain the decision record.

The member-facing Summary of Benefits and Coverage does not replace vendor contracts. For deductibles, employee contributions and other total-budget items, use our group health total-cost inventory. For funding comparisons, see Texas level-funded plan terms.

General information for employers, not legal, tax, or medical advice; plan documents and current rules control.

For assistance reviewing the fee inventory, contact PCI Solutions about your renewal contracts.

Itemized proposal review: a blank example

Use this example to request actual amounts, not to assume a rate. Start with the carrier or funding schedule and trace each component before calculating the total.

Proposal line	Reviewer entry	Approval check
Medical premium or scheduled funding	[quoted amount] × [billing periods]	Confirm census, effective date and included components.
Administration	[included / separate / unresolved]	If separate, record the unit, minimum and billing frequency.
Stop-loss, if applicable	[included / separate / not applicable]	Match the policy and funding schedule; identify terminal obligations.
Broker compensation	[embedded commission / direct fee / both]	Trace the disclosure; do not add an embedded commission twice.
Setup or termination charges	[contract amount and trigger]	Separate recurring charges from event-dependent obligations.
Rebates or surplus	[conditional terms]	Do not subtract an unguaranteed credit from required payments.

For example, if a proposal labels administration as included but the agreement lists a separate administrative charge, mark the total unresolved. Ask the issuer to reconcile both documents in writing before approving the proposal.