The broker charged Target almost nothing for the same coverage in the same year
For every dollar Macy's employees put toward supplemental health insurance, roughly 37 cents went straight to the broker.
That is the central allegation in a class action filed October 3, 2026, in a New York federal court against the retail giant and three affiliated Aon entities that brokered the company's voluntary benefits program.
The lawsuit, brought under the Employee Retirement Income Security Act, alleges Macy's failed in its duty to look after its workers' interests by allowing broker commissions to consume an average of 36.7 percent of every premium dollar employees paid for accident, critical illness, and hospital indemnity coverage over six plan years - from 2019 through 2024. In total, the complaint alleges approximately $13.2 million in commissions and fees flowed to the broker out of roughly $36.1 million in employee-paid premiums.
The plan at the center of the case - the Macy's, Inc. Enhanced Benefits Program - reports over 50,000 participants. Employees enroll during the company's annual open enrollment, and premiums come straight out of their paychecks. Between approximately 8,900 and 28,600 workers were covered under the supplemental health insurance contracts in any given year during the period in question, according to the filing.
The complaint's sharpest allegation involves what it calls "churning." According to the filing, the broker used "heaped" commission structures - high first-year payouts that taper off in subsequent years - and then switched insurance carriers to reset the cycle and capture a fresh windfall.
The numbers tell the story. The complaint alleges that in the 2019 plan year, broker compensation consumed 50.8 percent of premiums. That included a 65.1 percent commission rate on the critical illness contract alone - meaning, according to the filing, nearly two of every three dollars workers paid for that coverage went to the broker, not toward insurance. By 2021, the overall rate had declined to 22.8 percent.
Then came the carrier switch.
In the 2022 plan year, the complaint alleges, the plan moved from an Allstate subsidiary to an Aflac subsidiary. The product structure changed from three separate contracts to a single bundled one. And the commission rate spiked from 22.8 percent to 62.8 percent - nearly triple. According to the filing, none of these changes were disclosed to participants.
The complaint points to another employer's public filings to bolster the pattern. According to the filing, the same Aon entity placed the same bundled product through the same Aflac subsidiary at BlueTriton Brands beginning in the same 2022 plan year, with a near-identical commission trajectory: 65.1 percent in 2022, 37.9 percent in 2023, 21.8 percent in 2024.
Then there are the comparators.
According to the filing, in 2019, the same Aon entity placed roughly $10 million in the same categories of supplemental health insurance at Target - one of Macy's most direct retail competitors - through the same carrier, for total reported commissions of $214. Effectively zero. That same year, the complaint alleges Aon collected 50.8 percent at Macy's.
Other large employers cited in the complaint tell a similar story. According to the filing, HCA's plan paid an average of approximately 3.2 percent in broker compensation, Home Depot's paid approximately 4.8 percent, and Dollar Tree's paid approximately 9 percent - all for the same types of supplemental health insurance. The complaint alleges the Macy's plan's six-year average of 36.7 percent sits above the 75th percentile of more than 16,000 employer plans examined by the plaintiff's legal team.
The complaint also takes aim at how Macy's marketed the coverage. According to the filing, enrollment guides for the 2025-2026 plan year told seasonal, part-time, and hourly employees that the company offers supplemental health insurance "at discounted group rates." The complaint alleges those rates were inflated by broker compensation running several times the market median. The filing notes those enrollment materials were directed at workers it describes as "least equipped to investigate the commission economics behind their premium rates."
The lawsuit seeks approximately $9.6 million in losses - the gap between what was allegedly paid in commissions and what would have been paid at a 10 percent rate consistent with the benchmarks cited in the filing. The complaint also seeks the return of all commissions from the Aon entities, an order requiring Macy's to competitively bid for broker services going forward, correction of the enrollment materials, and appointment of an independent fiduciary to oversee the supplemental health insurance program.
For HR leaders administering voluntary benefits, the case puts a practical question on the table: does anyone in the organization actually benchmark what the broker is being paid - and would the numbers survive a side-by-side comparison with peer employers?
None of the allegations in the complaint have been tested, and no court has made any findings on the merits.
