In late 2020, the Consolidated Appropriations Act (CAA) was signed into law. Simply put, the CAA was a game-changer and rode right alongside the No Surprises Act, another piece of legislation adopted at about the same time that will help protect insured patients from unexpectedly large medical bills. In these pieces of legislation, the lawmakers and regulators targeted many key items that would have a significant impact not only on employers and costs but on the employee benefits industry as a whole, and while the No Surprises Act gained widespread attention, the CAA may have slid in under the radar. 

What is the Consolidated Appropriations Act (CAA)?

The CAA, among other things, will mean changes in prescription drug cost reporting requirements. Also, gag clauses on price and quality data in contracts between providers and insurers will soon be a thing of the past. Another section of the law is designed to ensure provider directories are as up-to-date as possible, in another step to avoid surprise billing.

In one of the clearest transparency provisions, the CAA also will require health plans to maintain online price comparison tools that will allow patients to compare expected out-of-pocket costs for items and services across multiple providers. Health plans also will need to provide price comparisons over the phone.

Another provision that will no doubt mean greater transparency and prove popular with health plan enrollees will require insurers to print deductible and out-of-pocket maximums on their ID cards.  Some carriers have interpreted this requirement to have been met as long as the member services phone number and website information is available on the ID card. 

While the enforcement of many provisions of the CAA has been pushed until 2023 as the government works out duplications between the CAA and the Affordable Care Act, one important provision requiring brokers, advisers and consultants to disclose to their employer clients all the compensation they expect to receive and detail the services they will provide takes effect beginning December 27, 2021.

Broker Compensation Transparency Under the CAA

The goal of the transparency rules within the CAA is to provide complete compensation transparency allowing employers to better understand broker incentives and gauge conflicts of interest.

Advisor offering employer insight on broker compensation CAA employee benefitsA broker’s compensation disclosure form, done properly, will reveal what a company is paying and, more important, receiving for the money being paid. Because most brokers’ primary compensation is commission paid by the insurance company, employers largely have ignored how much their broker is paid. This new rule means employers will be able to see exactly how brokers earn money, which can in turn help inform their plan decisions.

What Are Brokers (and other covered service providers) Required to Disclose?

Among other things, brokers and other covered service providers are required to disclose:

  • A description of all direct compensation, either in aggregate or by service, expected to be received in connection with the services.
  • A description of indirect compensation expected to be received in connection with the services.
  • A description of the arrangement between the payer and broker pursuant to which such indirect compensation is paid.
  • Identification of the services for which the indirect compensation will be received, if applicable.
  • Identification of the payer of the indirect compensation.
  • A description of the services for which compensation will be paid and identification of the payers and recipients if such compensation is set on a transaction basis (such as commissions, finder’s fees or other similar incentive compensation based on business placed or retained).
  • A description of any compensation expected to be received in connection with termination of the contract and how prepaid amounts will be calculated and refunded upon termination.
  • A description of how the compensation will be received.

The HR Awakening: What the CAA Means for You

The Consolidated Appropriations Act of 2021 (CAA), this law will require brokers to disclose info that’s been previously kept under wraps. This includes their compensation (both their salary as well as any carrier commissions, kickbacks, and “perks” like fancy trips or dinners) as well as the services they provide.

In short, for some, this is the first time you’ll be able to see how much they’re getting paid, where that money is coming from, and what you’re getting in return.

While some brokers in the industry have scrambled looking for ways to circumvent this ruling, the requirements are very clear with fines for non-compliance. Those attempting to circumvent these rules are exactly those these rules are meant to shake out of the industry. As decision-makers across HR departments begin to understand broker compensation, there is a hope that there will be a shift from choosing brokers simply delivering rate increases year-over-year to expecting brokers to play a much more active role as strategic advisors throughout the year. If anything these new requirements should shine the light for HR on the fact that not all brokers are created equal. 

Many brokers, such as JA Benefits located in Bedford, Indiana, were already proactively meeting these transparency requirements for their clients well ahead of these new regulations. Innovative advisors like these are moving forward-thinking clients beyond the status quo model of employer healthcare with its unsustainable annual rate hikes. Providing them with advanced strategies to finance and manage their healthcare, these next-gen advisers are delivering results that insurance companies and status quo brokers claim are impossible, like higher quality healthcare, no employee deductibles and employer cost reductions. And some next-gen advisers are even putting their compensation on the table to guarantee results.

As the word spreads and employers begin to understand the value of services provided against disclosed compensation, employers will begin searching compensation disclosure forms for meaningful results and compensation guarantees. Expect compensation transparency to disrupt the broker and healthcare status quo… in a good way.


For most of you reading this, the CAA may not kick in until later in 2022 or even 2023. The policy only impacts employers who entered into, extended or renewed their contracts on or after December 27, 2021.

Even if you’re not impacted by the CAA just yet, it’s probably still worth it to ask your broker about it. Their answers (or lack thereof) may shed some light on their priorities in your relationship. Here are some questions you can ask and things to understand about the answers you may receive:

Did you receive any kickbacks or supplemental commissions from the carrier that you recommended to us?

Too often brokers will feel pressured to guide their clients toward plans that are more aligned with their brokerage’s bottom line than the client’s needs. However, we recommend taking this with a grain of salt. Commissions are an inherent piece of the broker comp puzzle. Even the best brokers in the business receive commissions from carriers. After all, being a benefits consultant is hard work, and they deserve to get paid fairly. And just because they received a commission doesn’t mean that you’re not also being recommended the best possible plan for your company. A couple of good follow-up questions may be:

  • If you didn’t receive commissions, would you still consider this plan to be the best for our goals and priorities?
  • Did you receive any non-financial perks?

What actions are you taking to ensure you meet the CAA’s new guidelines?

From our perspective, more transparency in benefits brokerage space only aids in employers ensuring they are providing high-quality, affordable healthcare for all employees. (And for what it’s worth, we didn’t need the law to tell us to be transparent. It’s something we have always believed in.)

Unfortunately, not all brokers share that sentiment. A lot of brokers are feeling uncomfortable about this new policy.

Pay attention to how your broker responds to this one because it could tell you a lot about their perspective on the CAA. Are they forthcoming with their plans? Or are they surprised you know about the CAA in the first place?

Can you send over a document outlining your current compensation structure as well as services rendered?

This document should lay it all out there — from compensation, to commissions, to what services you’ll receive for your money.

Take notice of the way this information is presented. If this document is difficult to understand, maybe there’s a reason they feel the need to hide behind jargon. Don’t be afraid to ask for clarification if you need it. A truly transparent document is a clear and simple one.

Follow-up questions: 

  • Can you walk me through this document and explain it to me in layman’s terms?
  • Does this compensation statement also reflect carrier bonuses or incentives your brokerage firm received?