Broker commissions embedded in voluntary benefits are becoming a litigation target, with proposed class actions questioning whether employers and their advisers adequately monitored what workers were paying.

Where those programs fall under ERISA, plaintiffs are borrowing legal theories long used in retirement-plan fee cases, including breaches of prudence and loyalty, failure to monitor and prohibited transactions, according to Quarles & Brady attorneys Sarah Sise and Lauren Schuster.

The argument is not simply that commissions were high, but that fiduciaries allegedly failed to determine whether compensation, premiums and the value employees received remained reasonable.

In Pimm v. United Airlines, participants allege Mercer received more than $14 million in commissions between 2020 and 2024, averaging about 36% of premiums, while the products' historical loss ratio was significantly below 50%. Fellows v. Allied Universal alleges Mercer and Lockton received about $23 million over the same period, averaging 39.8%, compared with public filings showing commissions around 10% or lower for some similar large plans.

In Hannum v. Banner Health, the complaint alleges Lockton and BCInsourcing received about $20.8 million over six years, averaging 33.5% of premiums, with commissions rising from 13.2% to 67.6% when BCInsourcing joined as co-broker in 2020. The case also highlights "heaped" commissions, where compensation is substantially higher in an initial period before declining.

Those comparisons do not create a legal ceiling. The roughly 10% figures are plaintiff-selected comparators, not ERISA benchmarks established by courts or regulators. Sise and Schuster nevertheless cautioned that arrangements around 25% to 30% or higher may face greater scrutiny over whether compensation was reasonable.

Much of the information plaintiffs need to make those comparisons is already public. Under the Department of Labor's Form 5500 framework, insured plans that must file an annual return generally attach Schedule A, which discloses premiums and reportable commissions or fees paid to agents, brokers and others under the Schedule A reporting requirements.

That gives plaintiffs a ready-made dataset for benchmarking. Both Pimm and Fellows use Form 5500 information to compare challenged arrangements with other employers' voluntary-benefit programs. The Department of Labor has also said fees and commissions attributable to insurance contracts generally belong on Schedule A and need not be duplicated on Schedule C.

The broader compensation market is substantial. Across US employer group benefit plans, broker commissions rose from about $4.35 billion in 2015 to $6.49 billion in 2024, based on Department of Labor filings, even as fee-based compensation gained share, according to an analysis of broker compensation trends.

The voluntary-benefit cases push the issue beyond disclosure. Plaintiffs are also questioning whether employers benchmarked arrangements, considered alternatives and reassessed whether employees were receiving reasonable value. Loss ratios are part of that argument: a low ratio does not itself prove overpricing or a fiduciary breach, but plaintiffs are using it alongside commission data to question how much of employees' premium dollars return through benefits.

That makes the paper trail around each placement increasingly important. Sise and Schuster said employers should document how premiums and commissions were assessed, what market information was reviewed, what alternatives were considered and why an arrangement was retained. Compensation structures that vary by carrier or product, co-broker arrangements and discounts tied to voluntary benefits may also raise conflict-of-interest questions.

A proposed class action filed against USI Insurance Services in September adds another example.

Seven employees allege USI exercised control over its own voluntary-benefit program while receiving commissions and administration fees from the products selected. The complaint says USI and its affiliates received about $3.46 million between 2020 and 2024, including alleged commission rates of 25% on one product and 33.72% on another. The allegations have not been tested in court. The case adds to the legal scrutiny of voluntary-benefit commissions.

Not every employee-paid insurance program is necessarily subject to ERISA. Under the Department of Labor's voluntary-plan safe harbor, an arrangement can fall outside the law where the employer makes no contributions, participation is completely voluntary, the employer does not endorse the program and it receives no consideration beyond reasonable compensation for limited administrative work. Employer conduct that encourages participation or makes a program appear employer-sponsored can undermine that protection.

The broader risk is therefore not tied to a single commission percentage. The developing cases are testing whether the process behind each benefit can withstand scrutiny—how compensation compared with the market, what alternatives were considered, what employees received for their premiums and whether potential conflicts were identified.

Each arrangement leaves its own record, and public filings are giving plaintiffs an increasingly clear place to start looking.