Just as fiduciaries must uphold their duties when managing their retirement plans, the same is true for health care plans, which require thorough documentation, requests for proposals, committee-member training and more.

When it comes to creating a “fiduciary process action plan,” Rory Kane Akers, vice president and a senior ERISA compliance attorney at Lockton Companies, said at last week’s PLANSPONSOR Roadmap livestream on health plan fiduciary duties that Step 1 is understanding who the plan fiduciaries are.

“If you were to walk into a board meeting or a C-suite executive meeting and ask, ‘Who are the plan fiduciaries?’ I think everybody would sit on their hands,” Akers said. “The key here is to figure out who makes plan decisions to administer the plan appropriately.”

Akers said the plan document might name the plan sponsor or employer as the fiduciary, but it may not specifically name the vice president of human resources or the chief financial officer, for example. She said the company needs to identify the people in charge of hiring service providers and responsible for forwarding employee contributions, as the Employee Retirement Income Secure Act states that a fiduciary is anyone who exercises discretion with regard to the management and administration of the plan.

Jamie Greenleaf, co-founder of Fiduciary In a Box, said in recent litigation regarding health care plans, such as cases involving Johnson & Johnson and JPMorganChase, the lawsuits name the individual HR managers and board members. Greenleaf added that many plan sponsors have not spent enough time reviewing their plan documents and need to update documents to reflect some changes they have made to the design of the health benefits they offer.

“I think the easiest and biggest mistake that we traditionally see from most plan sponsors is they don’t even know where their plan document is, let alone if it’s in accordance with [changes they’ve made to the plan],” Greenleaf said.

Akers said she has found that plan documents also tend to be vague when it comes to health benefit plan eligibility.

“A lot of plan sponsors will implement standard plan designs for their [third-party administrator], and sometimes if you look at that document, there’s no clear criteria as to eligibility,” Akers said. “If you don’t have clear eligibility standards, the question when someone comes to you and says, ‘I think I should have benefits,’ becomes an even bigger question.”

Greenleaf added that some practical things a fiduciary should implement to ensure their health plan is up to fiduciary standards include:

1. Establishing a governance committee;
2. Reviewing and revising plan documents (as necessary);
3. Identifying routine processes; and
4. Consistently reviewing plan vendor performance and fees.

The governance committee should hold regular meetings to discuss plan operations, and it should keep detailed minutes of discussion points and decisions to illustrate proof of prudent oversight.

In terms of reviewing vendor performance, Akers said it is important to compare the value of services against others in the market and confirm that the TPA is carrying out any Consolidated Appropriations Act responsibilities that it accepted in writing.

“What we are starting to see is some of these vendor partners will, in contract terms, say they are fiduciaries with certain aspects of the plan,” Akers said. “I do think that the litigation [and] transparency rules have started a really good conversation, holding some of those vendors’ feet to the fire to say, ‘Are you fiduciaries?’ And I think it’s giving employers more willingness to push them to clearly put in their contracts that they are fiduciaries, to some extent.”

In September 2024, the ERISA Industry Committee called on Congress in an issue brief to deem pharmacy benefit managers as fiduciaries under ERISA, as they engage in practices that have the potential to raise costs for employees enrolled in employer-sponsored health plans.

A full recording of the webinar can be viewed here.