Most employee benefits broker tactics that cost employers money are not illegal. They are not even unusual. They are legitimate tools, used the wrong way, buried in documents almost nobody reads end to end.
That is what makes these broker tactics hard to catch. Nothing sets off an alarm. The renewal presentation looks thorough. The contract gets signed. And the cost of your health plan climbs again the following year without anyone being able to point at exactly why.
This is not a small line item to get wrong. The average family premium in employer-sponsored coverage reached $26,993 in 2025, a 6 percent increase over the prior year, according to KFF’s annual Employer Health Benefits Survey. For a company covering a few hundred families, a few percentage points of avoidable cost is real money leaving the business every month.
Below are six employee benefits broker tactics that show up repeatedly in plans employers bring to us for review, along with how to spot each one in your own documents and what to do about it.
These six broker tactics come from Part 1 of our Health and Welfare Plan Practices series on The Business of Benefits podcast, where Donovan Ryckis, Chelsea Ryckis and Patrick Ansara work through the list and grade each one. The countdown runs from twelve down to one, so Part 1 covers tactics 12 through 7. Part 2 takes on 6 through 1.
Where this list came from
Every year the IRS publishes a memo called the Dirty Dozen. It lists legal tax structures and processes that people are abusing: legitimate tools used the wrong way. The memo exists so taxpayers can get their house in order and so everyone knows where enforcement attention is headed.
Donovan Ryckis sat down to write the benefits version of that list and ended up with fourteen or fifteen broker tactics in a single sitting. The same framing works here. The employee benefits broker tactics below are not exotic schemes. They are standard industry practices that drift, and the drift almost always runs in one direction.
A fair caveat before we start. None of these broker tactics is happening everywhere, and plenty of advisors do none of them. But most plan sponsors could probably find one or two of these broker tactics in their own plan right now.
Tactic 12: PMPM instead of PEPM
The first of the broker tactics on this list turns on a single letter. Per employee per month and per member per month look almost identical in a fee schedule. Per employee per month counts only enrolled employees. Per member per month counts every spouse and every dependent as well.
The typical ratio of members to employees runs about 2.4 to 1. So changing a single letter multiplies a fee by roughly 2.4 times.
How to spot it
Put three documents side by side: your compensation disclosure, your contract, and your first invoice. The disclosure may say PEPM while the contract says PMPM.
Patrick Ansara runs the math on the episode. On a plan with 500 employees and 1,200 members, a $2 fee that shifts from PEPM to PMPM costs about $16,800 more per year.
How to fix it
Build a comparison step into every implementation. What was sold, what the contract says, what the first invoice actually charges. A good advisor already does this for you.
To be fair, PMPM is a legitimate pricing basis, which is why it belongs in a discussion of broker tactics rather than a discussion of fraud. For a service that genuinely touches every member, such as care navigation or a nurse line, it can be the right structure. The problem is one basis appearing in the disclosure and a different one appearing in the contract.
“If you look at your keyboard, the E and the M are nowhere near each other.” Donovan Ryckis
Split, leaning dirty. Chelsea Ryckis says it can be both, since an account manager producing a disclosure may not understand the difference. Patrick Ansara agrees it can go either way but lands on dirty most of the time. Donovan Ryckis goes dirty outright, on the grounds that he has only ever seen the mistake run in one direction.
Tactic 11: The contract stops matching the proposal
This is one of those broker tactics that needs no intent at all. You get sold on a solution. It goes to legal review, then procurement review. Months pass. Eventually a contract arrives for signature, and nobody lays it next to the original proposal.
In that gap, terms drift. A notice window for termination changes. A one-year term becomes three years. A performance guarantee quietly disappears.
It often happens during price negotiation. As a vendor comes down on price, terms get added on the back end to make the economics work for them.
A real example
Chelsea Ryckis had this happen recently. A vendor offered quarterly reporting. The employer asked for monthly instead. The vendor agreed, then removed a performance guarantee covering member response times from the contract without mentioning it. The two items were not even related.
How to spot it
Read the final contract against the proposal that sold you, line by line, before signature. Watch four categories specifically: performance guarantees, termination clauses, contract length, and data rights.
Data rights deserve extra attention, because they quietly enable several of the other broker tactics here. If a vendor expands its rights and asserts that your claims data is its data, you lose the ability to run a credible market check for as long as that contract runs.
How to fix it
Ask for the contract during the RFP rather than after selection. You learn something pricing will never tell you: whether this is a vendor who will let you see what is happening inside your own plan.
The same discipline applies at renewal, where these broker tactics resurface every single year. Renewal contracts change more than employers expect, and the account executive delivering yours probably did not review it either.
The most contested of the six broker tactics. Patrick Ansara leans dumb, mainly on the renewal side, because the account executive handing you the contract has usually not read it. Chelsea Ryckis is blunt: dirty all the way. Donovan Ryckis splits it 50/50, since changing terms is a legitimate way to make a price work, but it has to be called out.
Tactic 10: Undisclosed equity and ownership interests
Of all the broker tactics on this list, this is the hardest one to explain away. Some advisors hold equity in, and take revenue share from, the carriers and vendors they recommend to you.
This is usually disclosed. That is the part that catches people off guard. The disclosure runs ten to fifteen pages and frequently arrives after open enrollment, when everyone involved has just finished the most exhausting stretch of the benefits year. Technically disclosed. Practically unread. And the conflicts that are listed are rarely quantified, so even a careful reader finishes without knowing the number.
What the law actually entitles you to
Under the Consolidated Appropriations Act, 2021, brokers and consultants to group health plans must disclose their direct and indirect compensation. The Department of Labor’s Field Assistance Bulletin No. 2021-03 confirms the requirement applies to any covered service provider who reasonably expects to receive $1,000 or more, and that the disclosure must be made reasonably in advance of entering the contract.
Reasonably in advance. Not after the decision.
This connects directly to your own obligations. The DOL’s guide to fiduciary responsibilities under a group health plan makes clear that plan fiduciaries must act solely in participants’ interest and pay only reasonable plan expenses. You cannot assess whether a fee is reasonable if you do not know what it is.
How to spot it
Look for a favorite. It is the clearest fingerprint these broker tactics leave behind. If the same vendor wins in every category, every year, on criteria that are hard to verify, such as best network or best service, that pattern is worth a question.
How to fix it
Request a 408(b)(2) disclosure before the renewal conversation, quantified, the same way you would expect on the retirement side. If your advisor says they cannot produce a forward number, ask what it was for the last plan year.
The only unanimous verdict in Part 1. Patrick Ansara: undisclosed, dirty, not dumb. Donovan Ryckis puts it plainly, that if you are telling a plan sponsor you work for them you should not be getting paid by the other side of the table. All three close the segment on the same word: period.
Tactic 9: Pharmacy purchasing collectives
Pharmacy is where broker tactics get expensive fastest. The pitch sounds reasonable. Join a collective assembled by a large agency, get buying power your company could never get alone.
Then look at who assembled it. A collective is built to generate revenue for that agency, which means the revenue has to come from somewhere, and it is not coming out of the agency’s pocket.
Pharmacy is also the part of the plan where concentration is most extreme. The Federal Trade Commission’s interim staff report on prescription drug middlemen found that the three largest PBMs process nearly 80 percent of the roughly 6.6 billion prescriptions dispensed in the United States, and that the six largest handle more than 90 percent. The report also documented how vertical integration creates incentives for PBMs to prefer their own affiliated businesses. The FTC’s second interim report went further on how those arrangements affect drug costs.
What the numbers can look like
Patrick Ansara brings the numbers. One employer sitting inside a collective agreed to a reprice study taken directly to the same PBM. On a $9 million annual claim spend, the direct pricing came back $1.4 million better.
The gross plan cost was identical in both columns. What changed was the rebates, which were significantly higher outside the collective. The dollars existed the whole time.
How to spot it
Two signals separate a real buying group from one of the broker tactics on this list. First, restricted terms: you cannot get audit rights or reporting service level agreements written into the contract because you are inside the collective. Second, restricted data. If the value were real, you would be looking at the spreadsheet that proves it.
How to fix it
Ask for a reprice study direct with the same PBM. One request, one comparison, and you will know.
Dirty, across the board. Donovan Ryckis puts it at 75 percent dirty. Patrick Ansara is in the dirty camp because, as he says on the episode, these collectives are seldom set up to help plan sponsors, they are set up to help the agency that is setting them up. Chelsea Ryckis agrees.
Tactic 8: Captives used as an easy button
Group captives are a legitimate tool, which is exactly why they end up on a list of broker tactics. For a midsize employer with volatile claims, a captive can provide access to reinsurance markets that would be out of reach alone.
The problem is not the captive. It is the captive being brought onto the call because the broker cannot explain self-funding themselves.
Watch for the sequence. A company is new to alternative funding. Nobody on the broker’s side can walk through how self-funding actually works. So the captive representative joins the call to explain it. That moment tells you something about where the expertise sits.
It also tends to skip a step. Risk should be addressed in order: what can we avoid, what can we reduce, how much will we retain, and only then how much do we transfer. Adding a captive layer on top of a stop-loss layer before measuring the plan is buying more insurance rather than solving the underlying cost.
The part that surprises employers
This is where the broker tactics stop being passive. In many of these arrangements, broker compensation gets built into the captive layer rather than sitting as a line item with the third party administrator. To protect the relationship, that compensation is written as unassignable.
Read what that does. The insurance protecting your company and the broker selling it are now aligned with each other, against your ability to change advisors. You decide the relationship is not working, you select new representation, and the captive declines to sign.
How to fix it
Compare the captive against stop-loss outside the captive, side by side, so you can see what you gain and what you give up. Then make sure consultant compensation sits with the TPA as a transparent, assignable line item. If you are already inside one, negotiate that at renewal.
The only one of these broker tactics the team grades dumb, with one dirty exception. Patrick Ansara calls it the easy button, the I am lazy and I do not want to look at other options option. Donovan Ryckis agrees, except on the broker lockup. Writing compensation into the captive layer and making it unassignable is the part he grades dirty.
Tactic 7: The controlled market check
The last of these broker tactics is the one that makes the other five harder to catch. The tell is simple. You went to market, and you came back to the incumbent. Again, and again, and again.
Every carrier has an ideal client profile: the funding type they want, the data they need, the geography they serve, the risk parameters they accept. When you look at a prior year’s renewal presentation and see where a plan was marketed, it is often obvious the exercise was never going to produce a viable alternative.
How to spot it
Pull your last three renewals. Find where a market check was documented. Count the distinct vendors. If it is the same three names every year, that is a shortlist, not a market check.
Two other signals matter. If a carrier refuses to release your claims data until you are 60 days out, there is usually a reason they do not want the market seeing it. And if a carrier offers a better number in exchange for you not testing the market, consider what that implies. If they can do it when you do not market the plan, they can probably do it when you do.
Never accept a no-look renewal. Evaluating your options is part of your fiduciary obligation, not a favor to your broker.
Timing is the whole game
Sixty days before open enrollment, your options have closed. You cannot run a real market check, you cannot meaningfully renegotiate terms, and the other side knows exactly how little room you have.
Everything that creates leverage takes time. Getting claims data released takes time. Getting multiple underwriters to price your risk and form a consensus takes time.
Start at least 150 days before renewal. Stretch that to 180 or even 360 days if your procurement process runs long. Donovan Ryckis describes an enhanced benefit RFP for a company of roughly 2,500 employees. Taken to eight carriers rather than the usual two or three, the incumbent’s increase came down from 34 percent to 7 percent. That only happened because competitive data existed to bring back to the table.
This is also the cheapest defense against every one of the broker tactics on this list. It is a calendar decision.
Dirty, with a caveat. Chelsea Ryckis says dirty three times over and asks whether lazy can be added as a third option. Patrick Ansara says dirty in most cases he has seen. Donovan Ryckis lands on 50/50: dirty 100 percent when it is deliberate, but he leaves room for plan sponsors who simply do not have the same view of the market.
What these broker tactics have in common
Look across all six employee benefits broker tactics and a pattern emerges.
| The tactic | What it relies on |
|---|---|
| PMPM instead of PEPM | Nobody comparing the disclosure to the invoice |
| Contract drift | Nobody comparing the proposal to the contract |
| Undisclosed equity | A disclosure delivered after the decision |
| Pharmacy collectives | Restricted data you cannot verify |
| Captive lockups | Compensation buried where you cannot move it |
| Controlled market checks | A market test nobody counts the names in |
Every one of these broker tactics depends on information asymmetry. Not fraud. Just a gap between what your advisor knows and what you can see.
That gap is closable, and closing it does not require you to become a benefits expert. It requires asking for documents you are already entitled to and comparing them against each other.
It is worth remembering who carries the obligation here. Sixty-seven percent of covered workers are now in self-funded plans, rising to 80 percent at firms with 200 or more employees. If your plan is self-funded, those are your dollars paying those claims, and the contracts are with you, not with your advisor.
Your next 30 days
You do not need to audit all six employee benefits broker tactics at once. Start with the checks that cost you nothing but time.
- Count the vendors. Pull three years of renewals and count distinct names in each market check. Ten minutes.
- Stack three documents. Compensation disclosure, contract, first invoice. Confirm the fee basis matches across all three.
- Request a quantified 408(b)(2) disclosure before your next renewal conversation, not after.
- Put your renewal date on the calendar and count back 150 days. Block that week now.
- Ask where your advisor’s compensation sits, particularly if you are in a captive, and whether it is assignable.
- Confirm your data rights in writing with your carrier or TPA, and confirm your gag clause prohibition compliance attestation is filed, since that attestation exists specifically to confirm nothing is blocking your access to cost and quality information.
If you are in a pharmacy collective, add one more: request a reprice study direct with the same PBM.
Frequently asked questions
What are employee benefits broker tactics?
Broker tactics are practices used in the sale, renewal, and administration of employer health plans that are legitimate on paper but raise employer costs when applied without disclosure. Common examples include shifting a fee from a per employee basis to a per member basis, allowing contract terms to drift away from the proposal, and undisclosed ownership interests between an advisor and the carriers they recommend.
Are these practices legal?
Generally yes. Most broker tactics are perfectly legal, which is what makes them difficult to detect. The issue is usually disclosure and timing rather than legality. Federal rules do require brokers and consultants to group health plans to disclose their compensation in advance of a contract, and a failure to do that is a compliance problem rather than a gray area.
How do I know whether my broker has a conflict of interest?
Ask directly, in writing, before the renewal conversation. Request a quantified 408(b)(2) disclosure covering direct and indirect compensation, and ask specifically whether they hold equity in, or receive revenue share from, any carrier or vendor they are recommending. The answer, or the difficulty of getting one, tells you what you need to know. Most broker tactics become visible the moment compensation is quantified.
When should we start our renewal process?
At least 150 days before your renewal date, and 180 to 360 days if you have a long procurement cycle. At 60 days out, a genuine market check is no longer possible and your negotiating position is largely gone.
Does this apply to fully insured plans too?
Several of these employee benefits broker tactics do, particularly contract drift, compensation disclosure, and the controlled market check. The pharmacy collective and captive issues are specific to self-funded and alternatively funded arrangements.
The point of all this
None of these employee benefits broker tactics are always nefarious. Sometimes they are habit. Sometimes the person delivering your renewal genuinely does not know what sits behind it.
But when broker tactics are defensible, there is a simple standard that settles it, and it is the one the episode closes on: bring the data. Be transparent. Show the plan sponsor the math.
“One of our mentors said that this industry pays incredibly well for mediocrity, and I couldn’t agree more.” Donovan Ryckis
You manage every other part of your business with strategy. Benefits should not be the one area where broker tactics decide what you pay. If you want to see what a fiduciary approach to your health plan actually looks like in practice, that is the work we do.
Want the full conversation? Every figure above comes from Part 1 of Health and Welfare Plan Practices: Tactics or Tricks, Dirty or Dumb? on The Business of Benefits podcast. Donovan Ryckis, Chelsea Ryckis and Patrick Ansara take these broker tactics apart in full, tactics 12 through 7, with the arguments behind every verdict. Part 2 counts down 6 through 1.
