Using The New Group Health Plan Fee Disclosure Rules To Reduce Plan Costs

Like a 401(k) plan, a group health plan must comply with ERISA's rule that prohibits a plan fiduciary from paying more than a reasonable amount for services provided to the plan. When a group health plan offers insured benefits, service providers may receive a commission from the insurance company instead of direct payment from the plan sponsor or group health plan. Such a financial arrangement makes it difficult for the plan fiduciary to know what it has paid for the advisor's services.

With the enactment of the Consolidated Appropriations Act, 2021 (CAA), a plan fiduciary will have easier access to information about these forms of indirect compensation. The CAA amended section 408(b)(2) of ERISA to require certain service providers to group health plans to disclose specified information to a responsible plan fiduciary about the direct and indirect compensation that the service provider expects to receive in connection with its plan services. Under the CAA, any