Voluntary Benefits - return of broker commissions to employer

[waid10]

Hi. We offer certain voluntary benefits to employees (whole life, critical illness, etc.). We have been told by the broker that the insurer has extra funds in the premiums (commissions) that will go to the broker. The broker is telling us that it plans to send these commissions to us (the employer); and that the employer can use these funds. This concerns me. Can anyone point me in the direction of a statute on this? I want to be sure that the employer can receive these funds. And if so, what are the permissible uses for these funds?

Thanks.

[Peter Gulia]

Among other concerns under Federal and State laws (including laws regulating the business of insurance), a nongovernmental and nonchurch employer might want its lawyer's advice about whether receiving compensation of the kind the originating post describes might or might not result in the employer receiving "consideration" (described in 29 C.F.R. 2510.3-1(j)(4)) such that an arrangement the employer intended as not a plan governed by ERISA might be a plan governed by ERISA.

[waid10]

The broker is stating that the commissions (which they are calling give-backs) can be used for the three things listed below. Any thoughts on where this list comes from? Or what legal guidance allows this? I have asked the broker but haven't been able to get an answer that gives me much comfort.

Regarding voluntary benefits, the main give-backs include:

1. Online enrollment platform to overlay the HR software engine

2. Credit toward full benefits administration platform (which is unnecessary with the HR software engine)

3. On-site or telephonic HR/enrollment support.

[Chaz]

I agree with Peter. The "give-back" may be problematic under the "voluntary plan" safe harbor exception to ERISA's requirements. Any questions of "what legal guidance allows this" should be directed to an attorney.