PBM Compensation Disclosure Rule: What Brokers Need to Know for Self-Insured Plans

Quick Answer

On January 30, 2026, the Department of Labor (DOL) proposed a rule requiring pharmacy benefit managers (PBMs) and related consultants to disclose detailed compensation information to fiduciaries of self-insured ERISA health plans. If finalized as written, it would apply to plan years beginning on or after July 1, 2026, and would significantly expand transparency requirements around PBM fees, rebates, and indirect compensation. Brokers advising self-funded or level-funded clients need to prepare now.

Why This Matters Despite the CAA-26 Law Implementing Future PBM Reforms

If you work with self-insured or level-funded clients, prescription drug spend is already a high-pressure conversation. Employers are asking about rising costs, rebate pass-through, and specialty drug trends. Now layer on a new fiduciary disclosure rule that could be effective as soon as this summer. Other new PBM rules under the CAA-26 law are generally scheduled to become effective in 30 months, so employers cannot lose sight of the proposed rule potentially going live their very next renewal.

This is the kind of compliance development that can get overlooked during renewals. But once effective, failing to address PBM compensation disclosures could expose your clients to prohibited transaction concerns under ERISA. Just as importantly, it affects your credibility when employers ask, “Are our PBM fees reasonable?”

At Benefits Compliance Solutions, we are watching this closely because it directly impacts how brokers guide fiduciary governance for self-funded plans during the renewal process, before the employer makes their renewal decision, and the new plan year starts.

What the Proposed Rule Requires

The proposed rule was issued under the authority of the U.S. DOL and would amend disclosure obligations under the Employee Retirement Income Security Act (ERISA).

Who It Applies To

The rule applies to:

• Employers of any size

• With a self-insured ERISA group health plan

• Including level-funded plans

• That provide prescription drug benefits

  
  

It does not apply to:

• Governmental, tribal, or church plans

• Fully insured ERISA plans, for now

  
  

The DOL also requested comments on whether similar rules should apply to fully insured ERISA plans in the future.

How This Changes Current Disclosure Rules

Today, ERISA Section 408(b)(2) requires compensation disclosures from brokers and consultants. However:

• PBMs do not always provide full compensation transparency.

• TPAs and PBMs may not disclose indirect revenue unless acting as consultants.

• Fiduciaries often lack full visibility into rebates, spread pricing, and other revenue streams.

  
  

This proposed rule is designed to close that gap.

Key PBM Disclosure Requirements Under the Proposal

If finalized, PBMs and affiliated consultants would be required to provide:

1. Initial Disclosure Before Contract Execution

• Must be provided reasonably in advance of signing.

• Must include real dollar estimates, not formulas.

• Must disclose all direct and indirect compensation.

• Includes rebates, spread pricing, copay claw-backs, and other revenue.

  
  

This is a significant shift from high-level or formula-based reporting.

2. Semiannual Reporting

• Required twice per year.

• Must explain any compensation that exceeds initial estimates by 5 percent or more.

  
  

3. Expanded Information Access

PBMs must:

• Provide detailed data needed for plans subject to Form 5500 Schedule C reporting.

• Support RxDC reporting, including drug-level remuneration details.

• Provide machine-readable files upon request.

  
  

4. Audit Rights

• Plan fiduciaries may audit PBM compensation at least annually.

• The fiduciary pays for the auditor.

• PBM must provide the required information at no charge to the auditor.

  
  

5. Limits on Confidentiality Restrictions

PBMs cannot impose excessive confidentiality terms that block fiduciaries from reviewing compensation data.

6. Correction of Errors

Good faith disclosure errors must be corrected within 30 calendar days.

7. Prohibited Transaction Consequences

Failure to disclose required compensation would result in the plan sponsor being deemed to have engaged in a prohibited transaction, and the PBM being treated as a “party in interest” engaging in a prohibited transaction, under ERISA.

That is not a minor technical issue. It creates real fiduciary risk.

Effective Date and Comment Deadline

• Public comments due: March 31, 2026

• Final rule expected to be effective 60 days after publication

• Intended applicability: Plan years beginning on or after July 1, 2026

  
  

This timeline means employers with calendar year plans could be preparing later this year for implementation during their renewal discussions for 2027, while non-calendar year plans could be impacted sooner.

Practical Impact: How You Should Be Advising Employers

If you advise self-insured or level-funded clients, here is the fiduciary framing:

• Employers of any size are ERISA fiduciaries. Only governmental, tribe, or church plans are exempt from ERISA.

• Fiduciaries must ensure compensation paid to service providers is reasonable.

• Engaging a PBM without evaluating fee reasonableness may create prohibited transaction exposure.

  
  

Even though audits are optional under the proposal, ignoring compensation disclosures is not a defensible strategy.

Employers should begin incorporating PBM compensation review into:

• Renewal conversations

• RFP processes

• Fiduciary committee meetings

• Governance documentation

  
  

This is not just a contracting issue. It is a fiduciary oversight issue.

Broker Action Steps

Use this checklist with self-funded and level-funded clients:

• Identify which clients have ERISA self-insured prescription drug coverage.

• Confirm how PBM compensation is currently disclosed.

• Request sample disclosure templates from PBMs in advance of the final rule.

• Review fiduciary governance procedures to include PBM fee evaluation.

• Discuss audit rights and whether employers would realistically exercise them.

• Document review of compensation reasonableness in committee minutes.

• Prepare for potential Form 5500 and RxDC reporting detail expansion.

  
  

Being proactive here reinforces your role as a strategic compliance advisor, not just a renewal manager.

FAQ: PBM Compensation Disclosure Rule

Does this apply to fully insured health plans?

No, not at this time. The proposed rule is limited to self-insured ERISA group health plans, including level-funded arrangements. However, the DOL has requested comments on expanding similar requirements in the future.

What happens if a PBM fails to disclose compensation?

Under the proposal, failure to disclose required compensation would result in the plan sponsor being deemed to have engaged in a prohibited transaction, and the PBM being treated as engaging in a prohibited transaction under ERISA, creating fiduciary risk for the plan.

Are employers required to audit their PBM?

No. The proposal allows annual audit rights but does not mandate audits. However, fiduciaries must still determine whether compensation is reasonable.

Does this overlap with recent federal PBM legislation?

Yes. Congress recently passed legislation with similar compensation disclosure goals, effective for plan years beginning 30 months from enactment. The DOL rule could take effect sooner and applies specifically to self-insured ERISA fiduciaries focused on evaluating reasonableness of compensation before signing the contract, and two more times during the plan year.

Why is this considered a fiduciary issue and not just a contract issue?

Because ERISA requires fiduciaries to ensure that service provider compensation is reasonable. Without full disclosure, employers cannot meet that obligation and therefore cannot enter into that contract without entering into a prohibited transaction.

Final Thoughts

Prescription drug costs are already under scrutiny. This proposed rule signals that regulators believe PBM compensation transparency is a fiduciary governance issue, not just a market pricing issue.

As a broker, your clients will rely on you to flag this early and help them understand what changes are coming. Even before the rule is finalized, starting the conversation positions you as proactive and protective of their risk.

At Benefits Compliance Solutions, our role is to help you translate regulatory developments into clear, actionable guidance. This is exactly the kind of issue that can quietly create exposure if ignored and strengthen broker credibility if handled well.