Broker Fees and Commissions

[J Simmons]

ER pays insurance salesman a negotiated sum as a 'brokers fee' for arranging and facilitating the set up of a self-insured medical plan, and the hiring of a claims TPA. No policy was placed by this salesman.

Q1: Should that brokers fee be reported on Schedule A, Schedule C, elsewhere or not at all on the Form 5500?

The claims TPA places a stop-loss policy for the self-insured plan. The premium is paid to the stop-loss carrier which does not pay the claims TPA a commission. Instead, the claims TPA charged the ER for the stop-loss coverage an amount greater than the premium, and the claims TPA kept the excess over what the commissionless premium cost.

Q2: Should that excess collected by the claims TPA who placed the policy be reported on Schedule A, Schedule C, elsewhere or not at all on the Form 5500?

[JanetM]

Q1 I would put it on C since you don't have a specific contract to refer to. I use 19 on line 2g on the C.

Q2 How can the TPA take out stop loss on behalf of the self insured plan? But assuming they can, I again would put the TPAs cut on the C and use code 19. The stop loss would go on an A and show the actual premium for the policy.

[Bill Presson]

Q1 At this point, I wouldn't report it at all. Since it wasn't paid by the plan, I don't think it should be on Schedule C.

[JanetM]

Good catch Bill - I should have been reading closer. And if TPA really holds the stop loss that would not be reported either.

[J Simmons]

So if I understand your interpretation and an employer has a self-funded plan, there would be no need to report anything on Schedules A and C because the employer pays the costs directly rather than first into a fund? Or are payments from the employer's general assets for plan related expenses reportable on those Schedules because those payments come from the same funding source as the payment of claims--the employer's general assets?