Review Your Vendors on a Schedule, Not Only at Renewal.
The Department of Labor expects a formal review of each plan vendor at reasonable intervals. This page turns that into a plan-year calendar of reports, fees, complaints and contract terms.
Start Here.
General information, not legal or tax advice. Check the cited sources before you act.
Selecting and Monitoring Health Plan Service Providers
The overview page for this series, with all six topics and the sources.
PBM and Pharmacy Contracts
Fiduciary questions for the pharmacy benefit manager, plus the status of the January 2026 DOL proposal.
Fee Reasonableness and 408(b)(2)
The statutory exemption, the broker and consultant disclosure for group health plans, and what to do when it is missing.
A Formal Review at Reasonable Intervals.
The Department of Labor’s guide for group health plan fiduciaries says the employer is responsible for selecting a provider and generally is not liable for the provider’s decisions, but it must monitor the provider periodically to confirm the plan is administered prudently. The guide calls for a formal review process, followed at reasonable intervals, to decide whether to keep the current provider or look for a replacement.
It lists what the review should cover: whether the provider is performing the agreed services, the reports it provides, the fees actually charged, its policies and practices such as how a TPA processes claims, whether plan records are properly maintained, and follow-up on participant complaints. Neither the guide nor ERISA section 404(a)(1) sets a number of months for the interval, so the calendar below is our suggested rhythm, not a legal requirement.
Our Suggested Calendar.
Start of the plan year. Confirm that the fee schedule in the signed contract matches what the vendor is applying. File any change notices. A broker or consultant covered by ERISA section 408(b)(2)(B) must disclose changes to its compensation information within 60 days, so log the date each one arrives.
Every quarter. Read the performance reports the vendor sends. Compare claims turnaround, call-center results and any other service measures in the contract with what was delivered. Review the complaint log and make sure each complaint has an owner and an outcome. Our page on plan fiduciary duties and employee complaints covers that last step.
Midyear. Compare the fees actually charged with the agreement. Ask about policies and practices, for example how claims are adjudicated and how appeals are handled, and confirm that plan records are being kept.
Four to five months before renewal. Reopen the contract. Ask for the renewal compensation disclosure reasonably in advance, ask what changes are proposed, and decide whether to renew, renegotiate or go to market.
At renewal. Write down the decision and the reasons, then set next year’s review dates. A shared calendar such as our compliance calendar for your plan year is a good place to hold them.
Terms Worth a Yearly Reread.
The Department of Labor says to read, understand and keep copies of all contracts. At each review, look again at the scope of services, the fees and when they may change, any performance standards, reporting duties, audit and records access, subcontractor use, termination and transition help, and how responsibility for fiduciary functions is allocated. The guide notes that an agreement can be structured so the provider assumes liability for the fiduciary functions it performs.
For a TPA, the questions about who decides claims and who is the plan administrator are covered on the TPA and administrative services page.
Give Every Step a Name and a Date.
A calendar that no one owns is not a process. Assign each review step to a named person and a due date, and keep short notes of what was reviewed and what was decided. The Department of Labor tells fiduciaries to document the selection and monitoring process, and, where a committee is used, to educate its members on their roles. Minutes that record attendance, the reports reviewed and any follow-up are enough.
If the person who owns the calendar leaves, hand the file to a successor in writing. The reasons for past decisions should not leave with them.
Document, Notify, Decide.
If the review turns up a gap, put it in writing to the vendor, note the date and the response, and follow the cure steps in the contract. If the gap persists, the review exists to help you decide whether to replace the provider. A replacement search can reuse the file built under documenting the request for proposal.
One gap has a statutory path. If a covered broker or consultant fails to give a required disclosure, ERISA section 408(b)(2)(B)(viii) sets out a written request, a notice to the Secretary of Labor and a decision to continue or end the arrangement, described on the fee reasonableness page.
Laws And Sources
Department of Labor, Understanding Your Fiduciary Responsibilities Under a Group Health Plan: Monitoring a service provider: formal review, reports, fees, complaints.
29 U.S.C. 1104 (ERISA Section 404): The prudence standard in subsection (a)(1)(B).
29 U.S.C. 1108 (ERISA Section 408): Subsection (b)(2)(B) on timing of disclosures and the fiduciary’s remedies.
General information, not legal or tax advice.
Quick Answers.
Short replies on this page’s topic, each tied to a fuller guide.
How often should we review a plan vendor?
The Department of Labor calls for a formal review process followed at reasonable intervals and does not name a number of months. Tying reviews to the plan year, with quarterly report checks and a renewal review, is a common and defensible rhythm.
What should we read each quarter?
The reports the vendor provides, the claims and service measures in the contract, the fees actually charged and the participant complaint log. These track the monitoring list in the Department of Labor’s guide.
What if a vendor keeps missing the contract standards?
Document each miss, give written notice, use the cure terms in the contract and decide whether to keep the vendor or replace it. The Department of Labor describes the review as the way to make that decision.
The Rest Of This Series.
The Prudent Selection Duty
What ERISA section 404(a)(1) requires when you choose a TPA, PBM, broker or other vendor.
Documenting the RFP Process
The records that show every bidder got the same questions and that the choice was reasoned.
TPA Contracts and Fiduciary Roles
Who is the plan administrator, who is a named fiduciary, and how co-fiduciary liability works.
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