Who is a fiduciary of a health plan?
Fiduciary status depends on the authority a person exercises. Under the Department of Labor’s guidance on fiduciary responsibilities, discretion over plan administration, management or assets can create fiduciary responsibilities to the extent of that discretion or control.
Committee members and staff may therefore have fiduciary responsibilities for some functions, depending on their authority. A person need not be named as a fiduciary in the plan document. Selecting and monitoring service providers are examples of decisions that require a prudent process.
What do the duties require?
DOL’s group health plan guidance identifies the following responsibilities. The examples describe how they relate to plan administration.
| Duty (as DOL states it) | What it tends to mean for a medical plan |
|---|---|
| Acting solely in the interest of participants and beneficiaries, with the exclusive purpose of providing benefits | Decisions are made for the people covered rather than for administrative convenience or an existing vendor relationship. |
| Carrying out duties prudently | DOL describes prudence as focused on the process of making decisions, which is why documenting how a choice was reached matters as much as the choice. |
| Following the plan documents, unless inconsistent with ERISA | The plan is administered as written. |
| Holding plan assets in trust, if the plan has any | Relevant where participant contributions or plan assets are held rather than paid from general assets. |
| Paying only reasonable plan expenses | Fees and prices paid from plan assets are expected to be reasonable for the services received. This is the duty that most recent attention has focused on. |
Read the full description in the DOL publication Understanding Your Fiduciary Responsibilities Under A Group Health Plan.
How do disclosure and transparency rules affect plan oversight?
Compensation disclosures, access to claims information and published negotiated rates give committees different kinds of information. Each can support review of plan arrangements.
- Service provider compensation disclosure. The Consolidated Appropriations Act, 2021 extended ERISA’s service provider disclosure requirements to group health plans. DOL’s Field Assistance Bulletin 2021-03 explains that brokers and consultants expecting $1,000 or more in direct or indirect compensation must disclose it to the responsible plan fiduciary, so the fiduciary can assess whether the compensation is reasonable and identify conflicts.
- Gag clause prohibition and annual attestation. Plans and issuers may not agree to contract terms that restrict them from accessing provider-specific cost and quality information or de-identified claims data, and they must attest to compliance annually. CMS sets out who must attest and by when on its Gag Clause Prohibition Compliance Attestation page.
- Published prices. Hospitals have published negotiated rates since January 2021 under CMS Hospital Price Transparency, and health plans since July 2022 under Transparency in Coverage.
These disclosures can help a committee assess costs and conflicts. Their implications for a particular plan’s legal obligations should be reviewed with counsel.
What should a benefits committee be able to document?
A useful committee record explains what was considered, the information used and why the decision was made. For medical spending decisions, the following questions help organize that record.
- Which options were considered? Keep the carrier, network, benefit and vendor alternatives reviewed during the year.
- How were costs compared? Record current payments, projected costs and the reference used for comparison. The guide to healthcare price benchmarking explains how to define that reference.
- Which assumptions affected the result? Record expected participation, changes in provider access and the use of estimated rates.
- Who prepared the analysis? Note the analyst’s compensation and any interest in the option selected, alongside the relevant service provider disclosures.
- How was the decision reached? Retain the date, participants, reasons for the choice and any follow-up assigned.
What does a documentation checklist look like?
The records below can support committee review. Counsel can advise how they apply to the plan and its responsibilities.
| Record | What it shows |
|---|---|
| Committee charter and membership | Who holds discretionary authority and over what |
| Meeting minutes | What was considered, by whom, and when, with the reasoning |
| RFP and renewal records | The options on the table and the basis for the choice |
| Reference point source and date | Where the price comparison came from, what data it used, and when it was current |
| Assumptions and data quality notes | What was estimated, what was observed, and the assumptions behind each projection |
| Service provider compensation disclosures | The direct and indirect compensation disclosures required under the Consolidated Appropriations Act, per DOL FAB 2021-03 |
| Gag clause attestation | The annual attestation described by CMS |
| Conflict statements | Whether any party producing analysis for the committee had a stake in the outcome |
| Decision memo | A dated summary of the decision, the alternatives, and why |
Check whether the file includes the source and date of the cost comparison, the assumptions behind projected results and the interests of the parties providing advice. These details help a later reviewer understand the committee’s reasoning.
How Simple Healthcare helps
Roadmap compares carrier options and cost strategies using a plan’s anonymized claims and published negotiated rates. The analysis reports data dates and the share of spending priced from observed rates rather than estimates. Our methodology and data sources are available for review. We charge a fixed fee per enrolled employee, receive no share of identified savings and are independent of insurers, health systems and vendors. The committee and its counsel determine how to use that information in the plan’s decision process.