You know those complex fee-disclosure statements you have to make sure your employees get regarding their 401k plans? If the DOL has its way, workers may have to get the same type of info about their health insurance.
This is one of the surprising details that was tucked away in the Obama Administration’s Fiscal Year (FY) 2016 budget proposal.
Benefits consultant ERISA Diagnostics Inc. recently pointed out this proposal, which seemed to fly under the radar after the budget was released.
There have been a string of health-plan fee lawsuits — Hi-Lex Controls Inc. v. Blue Cross Blue Shield of Michigan and Dykema Excavators v. Blue Cross and Blue Shield of Michigan (BCBSM) — where plan administrators were accused of fiduciary responsibility violations.
So it looks like the DOL is looking to make providers in the healthcare industry as accountable for and transparent about plan fees as providers in the retirement field.
Dates back to 2011
Initially introduced back in 2011, the proposal was tabled until it was listed as a top priority by the Employee Benefits Security Administration (EBSA) this year.
Why the sudden urgency from the EBSA? One reason is because self-insured health plans are becoming more common, and the feds believe self-funded plan sponsors may not be fully aware of the fees they’re actually paying their administrators.
Fee info related to these plans, which are paid out of the general assets of the employer, can’t be found on the Form 5500.
Although there is a section of Form 5500 — Schedule A — that lists broker commissions, this section doesn’t require that these services be broken down on a line-by-line basis.
In the meantime …
While employers wait for the DOL to take action on this priority, there are several things that can be done to prevent paying excessive health plan fees.
For one, ERISA Diagnostics says employers should “review welfare plan [i.e., health plan] fees with the same scrutiny and diligence as you review 401(k) plan fees.”
And sponsors of self-insured plans can even go a step further. In the Hi-Lex lawsuit, the DOL filed a detailed amicus brief regarding “extensive discussion regarding plan assets.”
Employers can look at the DOL’s thoughts on this subject and then use that info to discuss fees with their administrators and brokers.