Encore! EP379: How Much Money, Really, Are Employee Benefit Consultants and/or Brokers Making From Plan Sponsors? With AJ Loiacono

How Much EBCs and Brokers Really Make Off Plan Sponsors, With AJ Loiacono (Encore EP379)

Why the CAA Makes This a "Magical Moment" to Demand Broker Fee Disclosure. Encore Episode 379.

What if your broker or employee benefit consultant is collecting $40 per prescription in hidden compensation from your PBM — and you have no idea? In this encore episode, Stacey Richter revisits her conversation with AJ Loiacono, CEO of Capital Rx, about the often-hidden ways EBCs, brokers, and even TPAs get paid, and why the Consolidated Appropriations Act (CAA) — in force since December 2021 — makes this a "magical moment" for plan sponsors to demand full compensation disclosure.

WHAT YOU'LL LEARN

✅ Real examples of the money at stake: a rumored $40-per-prescription commission and a $6-per-script kickback mailed quarterly to a PO box, both tied to which PBM won an RFP the EBC itself wrote and judged

✅ Why the CAA makes disclosure a fiduciary requirement under ERISA — plan sponsors must ensure every direct and indirect compensation paid on a plan's behalf is reasonable and free of conflict, not just what they're billed directly

✅ The exact process for requesting disclosure: ask for actual dollar amounts, not percentages, give the EBC or broker 30 to 90 days to respond, and report non-response to the Department of Labor

✅ Why non-compliance risk compounds over time — once one employer reports a broker for non-disclosure, that becomes public, exposing every other self-insured employer who used the same broker to class action risk

✅ Why AJ Loiacono calls this a "magical moment" for plan sponsors and for the honest brokers, EBCs, and PBMs already operating transparently

WHY THIS MATTERS

The Department of Labor is now putting the same enforcement emphasis on healthcare benefits that it put on 401(k) plans in the early 2000s, and the CAA gives plan sponsors the legal standing to act on it. Ignorance isn't a defense: if a plan sponsor doesn't know how much their EBC or broker is actually making off the plan, they can't evaluate whether that compensation is reasonable — and as fiduciary, it's the plan sponsor who bears the risk of getting that wrong.

=== LINKS ===

🔗 Show Notes with all mentioned links: Episode Page

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=== CONNECT WITH THE RHV TEAM ===

✭ LinkedIn ✭ Threads ✭ Bluesky ✭ X

00:00 Introduction

07:09 Who can get in trouble for mismanaging employee funds?

07:48 "When you talk about conflicts of interest, they're everywhere."

13:13 "You're paying for access."

13:34 Why is it important to request that they disclose direct and indirect compensation?

14:04 What are the layers to these hidden fees and compensations?

18:13 What is a reasonable fee for a good plan admin?

19:27 "I think people need to take a step back and say, 'How many different ways are they getting compensated?'"

24:50 "The compensation is not just unreasonable, but if they were to move it, they would lose access to an entire column of revenue."

25:06 "For every good broker consultant, there's a horrible individual lurking out there and it's easy to figure out: Ask for them to disclose their fees."

28:08 "You can't win if you can't even pay the house fee to come in."

31:35 Why do you need to ask for disclosure, and what do you need to ask specifically?

32:21 What are some of the characteristics of a good plan consultant?