I have what might be an embarrassingly simple question, but that's why I like the (relative) anonymity of these message boards.

Some welfare benefit brokers we've encountered offer things like FSA Discrimination Testing, Health Fairs, Flu Shots, FSA and COBRA administration and so on to clients. Absent some kind of billing/commission sleight of hand, is that rebating?

I'm also curious whether people run into this a lot. We see a lot of it in the LA area.

Thanks!

It might be if there are kickbacks to the brokers.

About the only people that I know that do anything for free are family members and close friends for one another. Brokers for clients? Doubtful. But the motive for performing these extra services might be to keep the client from looking around and finding more competitive fees from other brokers. In a given situation, a broker may not be receiving any rebating. However, since there is this 'smoke', it behooves the employer to look deeper to see if there's 'fire'.

In many, if not most, states any sort of inducement or enticement is unlawful. It might not be classified as rebating, but whatever it is called, it is prohibted by state insurance and possibly other laws. Look up your state insurance regulations, statutory and administrative, and you will see.

Here is a recent circular released by the state of New York DOI that outlines what in their view are acceptable additional services offered by carriers and producers in the service and provision of policies.

http://www.ins.state.ny.us/circltr/2009/cl09_09.htm

They also state that from time to time they may revisit the list to determine what services are legal and what are not.

Based on the circular, at least in NY, COBRA admin would be allowed; FSA administration would be disallowed (though help with the discrimination testing might be). Wellness programs are allowed as long as they are specified as part of the policy or contract and the producer would be allowed to provide risk assessments and strategies to reduce risks. So help with setting up a health fair and providing wellness info would likely be allowed but the producer actually paying for flu shots may go over the line.

I want to emphasize this is just one state's take on rebating. Check with your state department of insurance. They may have recently updated their outlook on acceptable practices. It would be nice if the NAIC would come up with a model policy because the individual states are all over the board on this.