Sponsoring a health plan makes you a fiduciary, whether or not anyone told you.
Most employers associate fiduciary duty with the retirement plan. ERISA imposes it on health plan decision-makers too, and the duty attaches to the person making the decision regardless of job title. It is not satisfied by good intentions or by a good outcome — it is satisfied by a prudent process, and a process you cannot evidence is hard to distinguish from one you never had.
Three obligations, none of them about getting the cheapest quote.
The standard is conduct, not result. A decision that turned out badly can be entirely defensible; a good result reached carelessly can still be a breach.
Act in the interest of participants
Plan decisions are made for the benefit of the people in the plan. Where the employer’s convenience and the participants’ interest diverge, the duty does not split the difference.
Pay only reasonable fees
Compensation paid out of plan assets or participant contributions has to be reasonable for the services delivered. That requires knowing what everyone in the chain is paid, including parties you never hired directly.
Follow the plan document
The plan has to be administered as written. An informal practice that conflicts with the document — an eligibility exception made as a favor, for instance — is a problem even when it is kind.
Build the file you would want if somebody asked.
Far more plan information is available to participants than a decade ago, and attention has followed the data. The defense is contemporaneous documentation, which cannot be created afterwards.
A decision file
What options were considered, what information they were judged on, who decided, and when. Three pages a year is usually enough, and three pages is a great deal more than nothing.
Vendor and contract oversight
Fiduciary duty extends to monitoring the vendors you hire. Fees reviewed, services compared against what was promised, and the review itself written down.
A named decision-maker
Someone has to own the decision. A small benefits committee with a short charter and a simple agenda is the cheapest governance improvement available to most employers.
Process, documentation, and a specialist when the question needs one.
A process review
How decisions get made and recorded today, what an inquiry would find, and the shortest path to a defensible process.
An annual governance calendar
The review points, the documents to refresh, and the filings that evidence the whole thing, carried on the same calendar as your renewal.
CPAs and attorneys through the firm
When a question crosses into legal or tax territory, we bring in the CPAs and ERISA attorneys available to clients through the firm rather than guessing at an answer.
Send us your renewal.
We’ll tell you whether it looks competitive, where we see opportunity, and the five questions we’d put to your carrier. No cost, and no obligation to move anything.
The renewal letter
Your current plan summary
Contribution split by tier
Enrolled counts by tier
Four documents — two more if your group is 50 or more. Nothing else; every extra one is a reason to postpone.
An independent employee benefits consulting firm. We look at the entire benefits program — cost, plan performance, risk and administration.
Bloomfield Hills, MI 48304
248.370.8853
719.425.2649
281.404.5670
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