Your 401(k) has a committee, minutes, benchmarking and an advisor who signs a fiduciary acknowledgment. Your health plan is the larger and less predictable spend, and it has a renewal meeting. ERISA does not distinguish between the two.
Who is a fiduciary of a health plan?
ERISA decides who is a fiduciary by what they do, not by their title. Under ERISA § 3(21)(A), anyone who has discretionary authority or control over how a plan is managed or administered is a fiduciary of it, to the extent of that authority.
For an employer health plan, that almost always includes:
- The company, as plan sponsor and usually as plan administrator.
- The people who make plan decisions on the company’s behalf: often the CFO, the head of HR, and anyone on a benefits committee.
- Any outside party that accepts fiduciary responsibility for its role in writing.
The duty applies whether or not anyone has told you about it, and whether the plan is fully insured or self-funded.
What a fiduciary owes the plan.
ERISA § 404(a)(1) sets out the standard of care. For a health plan, three duties do most of the work.
| Duty | What ERISA requires | What it looks like for a health plan |
|---|---|---|
| LoyaltyERISA § 404(a)(1)(A) | Act solely in the interest of participants and beneficiaries, for the exclusive purpose of providing benefits and paying reasonable expenses | Nobody advising the plan has an interest in it costing more |
| PrudenceERISA § 404(a)(1)(B) | Act with the care, skill and diligence a knowledgeable person would use in the same situation | Alternatives documented, vendors benchmarked, claims read directly, minutes kept |
| Follow the plan documentsERISA § 404(a)(1)(D) | Run the plan according to the documents that govern it, as long as they comply with ERISA | The plan document, the SPD and the vendor contracts agree, and the plan does what they say |
ERISA also requires diversifying plan assets (§ 404(a)(1)(C)). That duty matters where a plan holds investments, which most health plans do not.
Prudence is judged on process, not outcome. A renewal that went badly can still be prudent if the committee looked at the alternatives and recorded why it chose what it did. A renewal that went well is still exposed if nobody can show how the decision was made.
Is your broker a fiduciary?
Look for the section of your broker agreement titled “Relationship of the Parties” or something like it. Many agreements say, in some form:
- the firm is not a fiduciary to the plan,
- the firm acts as an independent contractor and does not give legal or tax advice,
- the employer keeps sole discretion over every plan decision, and
- the firm’s liability is limited, sometimes to the fees paid in the past year.
None of this is hidden, and none of it is unusual. It means the firm running your renewal has agreed, in writing, that the duties above do not apply to it. The duty, and the exposure, stays with you.
Ask your advisor to strike that paragraph and sign a fiduciary acknowledgment instead. If the answer is a paragraph rather than a signature, you have your answer.
Why brokers decline the duty.
Because the standard is demanding, and because loyalty is hard to show when an advisor’s pay rises with the plan’s cost. Many benefits advisors are paid a percentage of premium, directly or through the carrier. Nobody designed that to be a conflict. It just is one.
Since the Consolidated Appropriations Act, 2021, brokers and consultants who expect $1,000 or more in compensation from your group health plan must disclose it to you in writing under ERISA § 408(b)(2). Reviewing that disclosure every year is part of a prudent process. If you have never received one, ask for it.
A fiduciary process, in practice.
The same things your retirement plan committee already does, applied to the health plan:
- A committee with a charter, so it is clear who decides what.
- Documented alternatives at every renewal, not just the incumbent’s quote.
- Vendor benchmarking on a schedule.
- Compensation disclosures reviewed for every broker, consultant and vendor.
- Claims and pharmacy data read directly, not from a carrier summary.
- Minutes for every meeting and every decision.
The Ethos Fiduciary Framework™ turns those into a three to five year business plan for your benefits, reviewed with your committee every quarter.
How Ethos works to the standard.
Our consultants work to a fiduciary standard of care: the same duties of loyalty and prudence you carry as the plan sponsor. It is written into the engagement agreement, not a marketing page.
Donovan Ryckis, Ethos’s founder and CEO, advised retirement plans as a Series 65 investment advisor before founding Ethos. The standard came with him.
Every engagement runs the Ethos Method, five phases that produce the record a fiduciary needs. That record lives in the Ethos Fiduciary OS: decisions with their minutes, vendor reviews, compliance deadlines and plan documents, in one place.
This page describes ERISA in plain language for employers. It is not legal advice.