People in New Jersey participating in health plans operating under the terms of the Employee Retirement Income Security Act (ERISA) can expect their plan fiduciaries to know more about what they are paying for. The Consolidated Appropriations Act of 2021 called for brokers and consultants who sell products and services to ERISA health plans to disclose their sources of compensation related to these services. After the new disclosure requirements come into effect on Dec. 27, 2021, fiduciaries of ERISA health plans can evaluate whether the services that they purchase meet the standards of reasonableness imposed by ERISA.
ERISA fiduciary responsibilities
The U.S. Department of Labor provides clear standards about the responsibilities of ERISA plan fiduciaries. Their decisions must only support the interests of plan participants and beneficiaries. To accomplish this goal, fiduciaries must:
- Diversify assets
- Act prudently
- Comply with ERISA
- Avoid conflicts of interest
The law could place personal liability upon fiduciaries who fail to meet these standards. A court could require guilty parties to pay back losses to a plan.
Who must follow new disclosure rules?
Brokers and consultants that expect to collect at least $1,000 in direct or indirect compensation must inform fiduciaries about the sources of money. Fiduciaries buy many services and products, including:
- Brokerage services for buying insurance products
- Pharmacy benefit administrators
- Compliance services
- Medical management vendors
- Benefit plan designers
- Wellness services
Disclosures about compensation must include sources of money from affiliates and subcontractors.
Legal guidance on ERISA issues
As a plan participant, you may not think about its operation until problems arise with your benefits, such as ERISA disability claims. Due to the far-reaching rules within ERISA, you may want to talk to an attorney to get an outside opinion about your rights to benefits.