Schedule A: where Form 5500 broker commissions appear

Schedule A, “Insurance Information,” is an attachment to Form 5500 that the plan administrator must file for every contract under which an insurance company, insurance service, or similar organization — Blue Cross and Blue Shield plans and HMOs included — provides benefits to the plan. One Schedule A per contract, so a wrap plan with medical, dental, vision, life, and disability policies attaches five. The insurer is required by ERISA §103(a)(2) and 29 CFR 2520.103-5 to hand the administrator the numbers; the administrator is responsible for filing them.

Because the Form 5500 is public, Schedule A is the only place an outsider can see what an employer's broker was paid by the carrier in a given year.

Any insurance or annuity contract that provides plan benefits or holds plan funds: fully insured medical, dental, vision, life, AD&D, disability, prescription drug carve-outs with a carrier, and guaranteed investment contracts. The instructions exclude three things: administrative-services-only (ASO) contracts, fidelity bonds, and fiduciary liability policies. A stop-loss policy is reported only when it is a plan asset — more on that below.

Line 1 identifies the contract: carrier, EIN and NAIC code, contract number, persons covered at the end of the policy year, and policy year dates. Then come the two lines that matter most.

• Line 2 is the total of all commissions and fees attributable to the contract. It must equal the sum of line 3.
• Line 3 lists every agent, broker, or other person paid, in descending order of amount, with (a) name and address, (b) sales and base commissions, (c) fees, (d) the purpose of the fees, and (e) an organization code (3 is an insurance agent or broker, 5 a third-party administrator).

Commissions in column (b) are amounts the insurer charges to the contract and pays to a licensed agent or broker for selling or placing it — the classic percentage of premium. Fees in column (c) are everything else the carrier paid that depends on the contracts placed or retained: service fees, consulting fees, finder's fees, persistency and profitability bonuses, overrides, and non-monetary compensation such as trips.

Who pays? The money leaves the carrier, but it was priced into the premium the employer and employees paid. A fee the employer pays the broker directly is not on Schedule A; it appears on Schedule C if the plan is large and funded, and otherwise nowhere on the Form 5500.

Part II, Investment and Annuity Contract Information (lines 4 through 7), applies to pension plans holding deposit administration, immediate participation guarantee, or guaranteed investment contracts. For a health plan it is blank.

Part III, Welfare Benefit Contract Information, is the health-plan section. Line 8 is a set of checkboxes for the benefit types the contract covers — health, dental, vision, life, temporary disability, long-term disability, prescription drug, stop loss, HMO, PPO, indemnity, other. Lines 9 and 10 then split by rating method.

• Line 9, experience-rated contracts, where the plan's own claims set its renewal: premiums earned (9a); benefit charges, meaning claims paid and the change in claim reserves (9b); the remainder of premium, split into retention — commissions, administrative fees, acquisition costs, taxes, risk charges — and any dividend or retroactive rate refund (9c); and policyholder reserves (9d).
• Line 10, non-experience-rated contracts, where the plan is pooled: total premiums or subscription charges paid to the carrier (10a) and any specific acquisition cost (10b).

Most employers with 100 to 500 employees are on line 10. Larger insured groups land on line 9, where a real loss ratio (claims paid over premium earned) is computable from public data. Part IV, line 11, asks whether the insurer failed to provide any information needed; a “Yes” points at the carrier, not the broker.

Since December 27, 2021, ERISA §408(b)(2)(B), added by the Consolidated Appropriations Act, 2021, requires any broker or consultant that reasonably expects $1,000 or more in direct or indirect compensation for services to a group health plan to disclose that compensation to the fiduciary in writing, in advance, for every contract entered, renewed, or extended on or after that date. DOL Field Assistance Bulletin 2021-03 confirms it covers insured and self-insured plans and permits a formula or good-faith range where an exact figure is not feasible.

The two documents rarely match to the dollar, and the differences are informative:

• Schedule A is backward-looking and carrier-sourced — what the insurer actually paid during the policy year. The 408(b)(2) disclosure is forward-looking and broker-sourced — what the broker expects to receive.
• Schedule A covers only compensation from carriers. The 408(b)(2) disclosure also covers fees the employer pays directly and indirect compensation from TPAs, PBMs, wellness vendors, and referral arrangements, none of which reach Schedule A for a self-funded plan.
• Year-end bonuses and overrides on the broker's whole book appear as fees on line 3(c) but only as a range in the disclosure.

If the disclosure shows materially less than Schedule A, ask the broker to explain the gap in writing. No disclosure at all for a contract renewed after December 2021 is a question for ERISA counsel, not bookkeeping.

• Minute 1: Match each Schedule A to a policy you know you have. A missing carrier is a missing schedule.
• Minute 2: On the medical contract, read line 2. Divide it by line 10a (or 9a earned premium) to get commission and fees as a percentage of premium.
• Minute 3: Read line 3. Is your broker the only name? Is anyone paid you do not recognize? Is the fees column (c) larger than commissions (b), and does (d) explain why?
• Minute 4: If line 9 is filled in, compute claims paid (9b) over premium earned (9a). Under 75 percent on a large group is a renewal negotiation point.
• Minute 5: Check Part IV line 11. Then put line 2 next to the broker's 408(b)(2) disclosure for the same policy year.

Every public Schedule A on a welfare Form 5500 is parsed into the record you see for an employer: carrier, contract, persons covered, premium, and line 2 and line 3 compensation by recipient. From that we compute commission and fees as a percentage of premium per contract, compare it against employers of the same size and industry in the broker commission benchmarks, and roll up each named broker's book across all of its clients on the broker pages. Loss ratios are computed only where line 9 is populated, and self-funded plans are benchmarked on stop-loss rather than against insured medical commissions.

• Pull your most recent filing from the employer index and walk the five-minute read above.
• Compare your medical line 2 percentage against the size and industry benchmarks.
• Request the broker's 408(b)(2) disclosure for the current contract year and reconcile it to Schedule A line 2 and 3 in writing.
• If any carrier did not supply its Schedule A data, send a written request citing ERISA §103(a)(2) and keep the correspondence with the filing.
• Look up your broker on the broker pages to see how your compensation compares to the rest of their book.