Employer Health Plans Plagued by Hidden Broker Fees, Lawsuits Rising

The same conflict-of-interest problem that took down 401(k) plans two decades ago is now running through employer health and benefits plans. The fees are hidden, the brokers are collecting them, and workers are paying.

Average employer healthcare costs have hit roughly $26,000 per employee. A recent report found 79% of small- to mid-sized employer plans saw double-digit cost increases, with one in five rising 50% or more.

A May 2026 ERISA lawsuit against Banner Health and its broker Lockton Companies puts numbers on how this works. Lockton collected over $20 million in commissions between 2020 and 2024 on voluntary benefits like accident, critical illness, and hospital indemnity insurance. That comes out to 38.6% of premiums, against an industry norm of around 10%. Workers paid the full cost of those plans themselves and got coverage worth far less than what they paid in.

ERISA (the Employee Retirement Income Security Act, which sets minimum standards for employer benefit plans) lawsuits now target healthcare plans in 22% of cases, up sharply from where that number stood. The 2021 Consolidated Appropriations Act, and a 2026 update to it, added disclosure requirements and pharmacy benefit manager fee transparency rules, both enforced by the Department of Labor's EBSA division.

The retirement connection is direct. Inflated premiums reduce what workers can set aside each year. Someone who spent a career in a plan with fees running four times the norm had less money to save, compounded over decades. The litigation is catching up, but slowly.

The same overcharging and conflicts of interest that plagued 401(k) plans two decades ago are now surfacing in employer-sponsored healthcare and benefits plans, according to retirement plan advisor Jamie Greenleaf. Average employer healthcare costs have reached roughly $26,000 per employee, and a recent report found that 79% of small- to mid-sized employer plans saw double-digit cost increases, with one in five rising by 50%. A May 2026 ERISA lawsuit against Banner Health and its broker Lockton Companies alleges that the broker collected over $20 million in commissions between 2020 and 2024 — averaging 38.6% of premiums on voluntary benefits such as accident, critical illness, and hospital indemnity insurance — far above the industry norm of around 10%. Because employees paid the full cost of these plans themselves, the high commissions and poor coverage value amounted to excessive fees with little benefit to workers.

ERISA (the federal Employee Retirement Income Security Act, which sets minimum standards for employer benefit plans) lawsuits now focus on healthcare plans in 22% of cases, up sharply. The 2021 Consolidated Appropriations Act and a 2026 update introduced new disclosure requirements and pharmacy benefit manager fee transparency rules overseen by the Department of Labor's EBSA division. For workers and retirees, this matters because high healthcare costs directly reduce what employees can save toward retirement — and retirees who spent their working years in plans with inflated premiums may have accumulated less savings as a result.