Why a ‘Tidal Wave’ of Fiduciary Lawsuits Are Coming Soon

“I Call The Plan Fiduciary To The Stand!”

Whether they like it or not plan sponsors must now understand they are in the health insurance business……

What employers need to know:

The CAA expands ERISA Section 408(b)(2) to cover health and welfare benefits plans (specifically employer-sponsored medical, dental, and vision plans) and clearly identifies the plan sponsor (employer) as a fiduciary on the plan.

It requires the plan sponsor to:

  • Ensure all gag clauses have been removed from plan contracts
  • Collect compensation disclosures from all brokers/consultants servicing the plan
  • Determine if the compensation earned by those vendors is “reasonable”
  • Submit annual attestations to the DOL to that effect
  • Prepare for detailed reporting on prescription drug usage and coverage equality for mental health vs. medical conditions.

What should employers do?

  • Step 1: Acknowledge that you must now administer your health and welfare benefits plans as a fiduciary.
  • Step 2: Establish a fiduciary process to review your current plan, evaluate its performance, and document your decision-making process
  • Step 3: Identify all plan vendors, and collect compensation disclosures from all Covered Service Providers (as defined by the CAA)
  • Step 4: Benchmark those vendors against others in the area to determine if their compensation is “reasonable”
  • Step 5: Determine which vendor will complete the prescription drug reporting on your behalf (carrier, TPA, PBM, external 3rd party?)
  • Step 6: Determine which vendor will complete the analysis to demonstrate coverage equality for mental health vs. medical conditions.

Getting into compliance with the CAA will be a big lift. It will require taking a hard look at your current benefits plan, reevaluating decisions that were made years ago, collaborating with your service providers, and seeking advice from unbiased experts.