Don’t Take a Chance: Manage Your Health and Welfare Plan Risks

Fiduciary risk in sponsoring health and other welfare plans has grown with the passage of the Affordable Care Act and the Consolidated Appropriations Act, 2021 (which includes the No Surprises Act). Cost and expense transparency can lead to participants’ second-guessing the sponsor’s choices with respect to these plans. That could mean that investment/fiduciary committees, normally focused on retirement plans, may need to broaden their responsibilities to monitor health and other welfare plan activities, and their reporting and disclosure compliance, too.

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Related Content

• Transparency Disclosure Rules for Group Health Plans
  See how fiduciary committees can help ensure that fiduciary decisions are well-documented. Transparency in decision-making promotes accountability and can be valuable in the event of audits or legal inquiries, especially in view of an uptick in DOL audits of health and welfare benefit plans.
• Balance Billing and Other No Surprises Act Rules
  Recognize that the No Surprises Act requires that health plans provide publicly accessible machine-readable files of the plan's (1) in-network rates for covered items and services, (2) out-of-network allowed amounts and billed charges for covered items and services, and (3) rates and charges for covered prescription drugs. This can lead to participants (and plaintiff firms) probing into fee disclosure (like on Form 5500 schedules) and scrutinizing underlying fees.
• Investment Committee Issues for Defined Contribution Plans
  Apply similar monitoring functions to a health plan as your investment committee now does for your retirement plans. While, for health and welfare plans, the focus will be on comporting with the disclosure requirements of the No Surprises Act and other health plan transparency rules of the Consolidated Appropriations Act, 2021, remember to have the investment committee review the Form 5500 schedules and the fees paid to insurers and third parties. The review is an important step toward satisfying fiduciary compliance.

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