Leadership1 publisher2 min readPublished
ERISA suit holds Macy's answerable for a broker's 37% cut of worker-paid premiums
Macy's workers allege in an ERISA class action that Aon brokers took 36.7% of what they paid for voluntary health cover over six years. Their case is that a plan funded from paychecks still left Macy's with a duty to check the broker's pay.
The Board Room · Leadership desk
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What happened
- The class action was filed on October 3, 2026, in a New York federal court against Macy's and three affiliated Aon entities.
- The complaint puts the total at about $13.2 million in commissions and fees out of roughly $36.1 million in premiums paid by employees from 2019 through 2024.
- In 2022 the plan moved from an Allstate subsidiary to an Aflac subsidiary and the commission rate rose from 22.8% to 62.8%, which the filing says participants were not told.
- In 2019 the same Aon entity placed about $10 million of the same cover at Target through the same carrier for $214 in total reported commissions, according to the filing.
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Why it matters
- exposure If this ERISA theory survives, employers that run voluntary cover through payroll deduction carry liability for broker pay they never funded.
- decision Under the churning theory, a carrier switch approved at this year's renewal also sets a new first-year commission that employees pay through next year's premiums.
- constraint Marketing voluntary cover as discounted group pricing becomes hard to defend unless the employer has benchmarked the broker pay built into the premium.
- precedent If the court accepts a 10% benchmark, plaintiffs get a damages formula they can apply to any voluntary plan whose broker pay runs above it.
The first defense available to an employer is that its workers paid for these policies themselves. Employees chose the cover at Macy's annual open enrollment, and the premiums came straight out of their paychecks [5]. In any given year, between about 8,900 and 28,600 workers were covered under the supplemental contracts [15]. The complaint answers that Macy's put its own name on the price. The 2025-2026 enrollment guides, aimed at seasonal, part-time and hourly staff, said Macy's provided its supplemental health cover "at discounted group rates" [12]. The complaint alleges those rates were inflated by broker pay running several times the market median [12]. The filing says the materials went to workers "least equipped to investigate the commission economics behind their premium rates" [13].
The complaint's account of how the cost built up turns on timing. It alleges the broker used "heaped" commissions, high in a contract's first year and tapering after that, and then switched carriers to start the cycle again [6]. The Macy's plan paid 50.8% of premiums to the broker in 2019, including 65.1% on the critical illness contract. By 2021 the rate had fallen to 22.8% [7]. According to the filing, the same Aon entity placed the same bundled Aflac product at BlueTriton Brands from 2022, with commissions of 65.1%, 37.9% and 21.8% over the next three years [9].
The filing's comparators bought the same types of cover. It puts broker compensation at about 3.2% of premiums at HCA, 4.8% at Home Depot and 9% at Dollar Tree [11]. The 10% rate used to size damages is higher than all three [16]. At 10% of the $36.1 million in premiums, the broker would have earned about $3.6 million. Set against the $13.2 million alleged, that leaves a gap of about $9.6 million [17], which is the loss the suit seeks [14].
For other employers, the trade-off is between a benefit that is cheap to run and one that takes staff time to monitor. The plaintiffs did that monitoring from outside the company. Their lawyers placed the Macy's six-year average above the 75th percentile of more than 16,000 employer plans [3], and the BlueTriton figures came from that employer's public filings [9]. In my view, any benefits team can now be measured against the same kind of benchmark, whether or not it builds one itself. For now the claims are allegations, and the report does not include a response from Macy's or Aon.
What to watch
- Macy's and Aon's first responses to the complaint, especially any argument that an employee-paid voluntary plan falls outside the duty the suit asserts.
- Whether the court accepts the 10% benchmark the plaintiffs use to size the $9.6 million loss claim.
- Further ERISA filings against employers whose voluntary plans show the heaped-commission pattern alleged at Macy's and BlueTriton Brands.