Am I a fiduciary for our health plan?”

Yes. If your company sponsors a health plan, you are almost certainly a fiduciary for it under the Employee Retirement Income Security Act (ERISA), and that role carries a legal duty to make sure the plan pays reasonable fees for the services it receives.

Most employers already understand this for their 401(k). Fewer realize the same law covers their health plan, and that the obligations are nearly identical.

What being a fiduciary means

A fiduciary has to act prudently and in the sole interest of the plan's participants. In practice that means paying only reasonable fees for the services the plan uses, following a careful and documented process for the decisions you make, and putting employees' interests ahead of convenience or the status quo. The duty is not to find the lowest price. It is to make informed decisions and be able to show your work.

Who holds the duty

The company that sponsors the plan is the fiduciary, and so are the people who make decisions about it, often a benefits leader, a CFO, or a committee. You can hire advisors and administrators to run the plan day to day, but you cannot hand off the fiduciary responsibility itself. It stays with the plan sponsor. This is most pronounced for self-funded employers, who direct how plan dollars are spent, though the underlying duty applies broadly.

Why this is a live issue now

For years, retirement plans drew the scrutiny and health plans did not. Part of the reason was simple: the fee and pricing data employers needed to evaluate their health plans was hard to see. That changed. The Consolidated Appropriations Act of 2021 required new fee and compensation transparency, so the information is now available (see “What does the CAA require of us?”). And a wave of lawsuits has begun testing whether employers are meeting the duty. You can follow the major cases on our Health Plan Lawsuit Tracker.

What a fiduciary is expected to do

The expectation is a prudent, repeatable process:

• Put a benefits committee and a simple governance routine in place, and keep notes.

• Benchmark your plan's fees and value against comparable plans, rather than assuming they are reasonable.

• Act on what the benchmarking shows, and document the decisions.

• Revisit it on a regular schedule, because reasonableness is not a one-time finding.

That is the same discipline employers already apply to their retirement plans. See How It Works for how the benchmarking is done.

The bottom line

Being a fiduciary for your health plan does not require you to have the cheapest plan. It requires you to know whether your fees are reasonable and to be able to prove it. Independent benchmarking is how you get there.

This article is general information, not legal advice. Consult your own counsel about your plan's specific obligations.