- Key insight: Learn how litigation is forcing transparent pricing across voluntary employee benefits.
- What's at stake: Regulatory scrutiny and fiduciary exposure could upend broker compensation models.
- Expert quote: Justin Leader - Focus shifts from disclosure to reasonableness, monitoring, and defensibility.
Source: Bullets generated by AI with editorial review
This is part two of a series. Read part one
Several class-action
For brokers and advisers, the implication is clear. Compensation structures that may have survived on opacity will now be
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FiveFive10, LLC Managing Director and strategic adviser David Essary believes these lawsuits will spark a long overdue industry reset. Regardless of how they turn out, he's confident "we'll see a greater level of scrutiny of both broker and vendor fees; full transparency of those and carrier loss ratios will be expected."
When he was leading Allstate Health & Benefits from 2021 to 2025, Essary and his teams started using medical claims data to reveal potential claim eligibility for supplemental benefits. He notes a dramatic increase in both utilization and interest of these services "because it's the logical way to drive more value and claims integration across the benefits spectrum."
Bundling voluntary benefits within employer-sponsored health plans sparks ERISA implications, explains Charlotte Santa Cruz, founder of the Santa Cruz Insurance Group, LLC, a Foundation Risk Partners Company. A major medical insurance carrier, for instance, also may offer accident, critical care and hospital income insurance on an employee-pay-all voluntary basis. However, she says enrolling voluntary benefits that are not tied to health plans is considered the best approach to avoid running afoul of ERISA.
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Eric Silverman, founder of Voluntary Disruption, advocates a model that allows the fiduciary process to be documented, compensation to be levelized and aligned, decision support to be embedded and enrollment to reflect understanding rather than exposure.
"That approach strengthens everyone involved," he says, noting that employees gain confidence, HR gains defensibility, advisers gain relevance and carriers gain stability. "This moment is not about fear. It is about maturity."
Dental and vision may be next
The next set of class actions on the health and welfare side of the employee benefits space could involve dental and vision coverages, predicts Julie Selesnick, executive director, legal and compliance with the Judi Group, founder of Health Plan Legal Counsel and senior counsel for Berger Montague. "Those are health plans where employers are supposed to be demanding disclosures," she says.
In fact, these plans are now in the crosshairs of congressional oversight. Three House Republicans who were instrumental in building pharmacy benefit manager transparency provisions into the Consolidated Appropriations Act of 2026 are closely examining market concentration in dental insurance and vision insurance. They're also hoping to determine whether insurance company ownership of services and product providers is distorting those markets.
Since employees are paying the full cost of voluntary benefits, Selesnick says it's important to ensure that they understand what they're paying for. That means treating them like the rest of an employer's health and welfare plan portfolio.
"We have to be able to benchmark how good this product is," she says. "They're fully insured plans. They can tell you a loss ratio. They can tell you how things work. So, brokers could actually start having to compete for business, which would be a good thing."
The easiest way to make voluntary benefit sales more transparent is to include them on a compensation disclosure, Selesnick suggests.
"The types of advisers and brokers who can distinguish themselves right now would be the ones who say, 'this isn't technically part of a 408b-2 form, but we want to make sure you understand all of our lines of income from your business. And so, we've included it all here,'" she says.
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For true worksite brokers, Santa Cruz says it's worth noting that a considerable share of their commissions go to the referring case broker, which can be as high as 50%, even though they actually presented the product and handled the service.
Another point worth noting is that the worksite broker provides due diligence, employer presentations and personal employee enrollment support with on-site or remote counselors to explain the benefits – all of which she says comes at a significant cost.
Adds Selesnick: "No one's saying that a broker can't be profitable, and no one's saying they can't sell these products. You just have to be forthcoming and take reasonable compensation. If you do those two things, you will largely stay out of trouble at least in ERISA."
