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. The test shows up in plan design choices, such as cutting a benefit mainly to simplify administration or keeping a vendor for the relationship rather than the service. Write down how participants were considered, even in a sentence.
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. For a health plan that includes broker commissions, pharmacy rebates and spread, and administrative fees built into premium. Brokers and consultants are required to disclose their compensation to the plan fiduciary in writing, and it is worth knowing how brokers are paid before you read one.
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. If a practice is worth keeping, amend the document to match it. If it is not, stop it and apply the document consistently, because carriers and stop-loss insurers pay according to the written terms.
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. Keep it with the renewal documents it refers to, so the reasoning and the numbers can be read together years later.
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. Once a year is a sensible rhythm: compare fees to what was quoted, check service against the contract and note whether a market check is due.
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. The charter only has to say who sits on the committee, what it decides and how often it meets. Without one, decisions drift to whoever happens to be handling the renewal.
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. We start with the last renewal: who saw which options, what was decided and what was written down. The gaps usually show up there, and so does the first document worth putting in place.
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. Committee meetings, fee reviews, the plan document and SPD refresh, and filings such as Form 5500 and the gag clause attestation sit on one schedule, so nothing depends on memory.
CPAs and Attorneys Through Us
When a question crosses into legal or tax territory, we bring in the CPAs and ERISA attorneys available to clients through us rather than guessing at an answer. We frame the question first, with your plan documents and history in hand, so the specialist’s time goes to the answer rather than to the background.
What employers ask about fiduciary duty.
Are we really a fiduciary?
If you sponsor a health plan, yes. The duty applies whether or not anyone has told you, and it does not require you to be an expert — it requires you to run a process and be able to show it.
What does “reasonable fees” mean in practice?
That you know what you pay and can say why it is reasonable for what you get. That is a documentation question more than a price question, and an undocumented good deal is still undocumented. A fee that was reasonable when the contract was signed can drift as enrollment grows, so the review needs a date on it and a reason it still holds.
What would we need if someone asked?
A decision file. Who decided, what they considered, what the alternatives were and when it was last reviewed. Building it as you go costs very little; reconstructing it afterward is the expensive version. We prepare the renewal analysis and the options we present in a form that can go straight into that file, so much of it builds itself.
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Fiduciary and Governance Services in Bloomfield Hills for Your Health Plan
Many business owners and HR leaders do not realize they are responsible for their company health plan under federal law. They pick a plan, pay the bills and keep few records of why. Fiduciary and governance services in Bloomfield Hills help you put a simple, sound process in place.
We are CFH Insurance Consultants, an independent benefits firm in business since 2007. No carrier owns us. We work with employers in Bloomfield Hills, Troy, Southfield, Birmingham and across Michigan.
Fiduciary & Governance Services
Under ERISA, the people who make decisions about a health plan are often fiduciaries. A fiduciary is someone who must act in the best interest of plan members. That means making careful choices, paying only reasonable fees and following the plan documents.
Governance is the process that shows you did that. It means regular meetings, clear records and a reason for each decision.
Here is how our fiduciary and governance services in Bloomfield Hills help:
- We help you set up a benefits committee and a simple meeting schedule.
- We prepare agendas and help you record decisions.
- We review vendor contracts and fees with you.
- We check that plan documents and the summary plan description are current.
- We keep your filing and notice dates on a calendar.
- We help keep you ERISA compliant. Clients also get access to ERISA attorneys and CPAs through the firm.
Who is a fiduciary of a company health plan?
Often it is the people who choose vendors, set plan terms or control plan money. That can include owners, officers and HR leaders. The plan documents usually name a plan administrator too.
If you are not sure who holds that role at your company, that is a good first question. An ERISA attorney can give you a firm answer for your plan.
What records should a benefits committee keep?
Keep it simple and steady. Good records usually include:
- Meeting dates and who attended
- The options you looked at and the one you chose
- Why you chose it, in a sentence or two
- Vendor contracts, fee reviews and renewal documents
Records like these show you acted with care. They also help new committee members understand past choices.
Pharmacy benefits deserve attention too. Michigan licenses pharmacy benefit managers under Public Act 11 of 2022, with licensing in place since 2024. A pharmacy benefit manager, or PBM, runs the drug side of many health plans. Ask whether yours is licensed.
Common questions
Do small employers need a benefits committee?
Not by law in every case. But even a small group of two or three people with written notes is a smart habit. The point is that more than one person looks at the decision and someone writes down why. For a small employer, the owner, the person handling HR and the finance lead is often enough.
How often should a committee meet?
Many meet a few times a year, with one meeting before renewal. A meeting before renewal lets the committee set priorities before quotes arrive, and one after open enrollment is a natural time to review how the decision played out and whether vendors delivered.
Can you give us legal advice?
We are licensed insurance brokers, not a law firm. Clients get access to ERISA attorneys through us. We can explain how a rule generally applies to your plan and prepare the facts an attorney will need. The legal opinion itself comes from counsel.
Talk to us about fiduciary and governance services in Bloomfield Hills
Book a 30-minute call and we will help you set up a simple process. Our office is at 41000 Woodward Avenue, Suite 350 East, Bloomfield Hills, MI 48304. Call 248.370.8853.
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.
Switch to CFH. Unhappy with your broker? Your employees won’t notice. You will. →