The Consolidated Appropriations Act (CAA) encompasses a wide range of provisions that impact employers, including their fiduciary responsibilities and obligations related to health plans. In this blog post, we will explore key aspects of the CAA that employers need to be aware of as the table stakes have changed. You now have a higher standard for how you assess the success of your plan and chosen vendor partners. This comes with more scrutiny on you and increased consequences for failing to comply. The good thing about this is that change in this case is for the good and we can draw on what happened in the retirement space to show the benefit beneficiaries and Plan Sponsors. The challenge is that it’s scary, may feel unchartered, however the opportunity to transform your plan into a recruiting asset is very REAL.
What happened 20 years ago in the retirement space?
A little more than two decades ago, a severe absence of transparency plagued the system. Service providers frequently faced conflicts of interest, and employers lacked proper procedures and advocates. Consequently, users didn’t have enough money to retire with dignity. However, fast forward to 2022, and you will discover a complete transformation. Transparency now prevails in vendor compensation, conflicts have been eradicated, and commissioned educators are no longer in the picture. Employers now conduct regularly scheduled committee meetings to adhere to a responsible fiduciary process. This newfound transparency has significantly aided employers in enhancing outcomes for their employees.
Health Plan Fiduciary Responsibilities:
The CAA reinforces employers’ fiduciary duties related to their health plans and installs a “prudent man” rule to create and guide decision making and creates the governance procedures for your health plan. Employers should review their plan governance structure and ensure compliance with the Employee Retirement Income Security Act (ERISA) guidelines.
Establishing a Fiduciary Committee – Not unlike retirement plan, you’ll have to actively engage a committee to establish the rules of the road for your plan. These include:
- Documenting the goals of the Plan
- Document your procurement process for Medical and Prescription Drugs.
- Document & Demonstrate a decision-making process based on the Plan’s actual data.
- Benchmark your plan against industry accepted and RFP standards.
- Disclosure and Benchmarking of Direct and Indirect Compensation from All Service Providers
What’s great about this legislation is that it gives tremendous insight to decision makers about how healthcare works. With the right advisor and vendor partners, there is a transformational opportunity to create a plan that works for you and your employees. You will have more information to create transparency in healthcare and further help guide your team to solutions that can keep them out of harms way, save money, and create massive wellbeing leverage.
The Consolidated Appropriations Act places significant responsibilities on employers regarding their fiduciary obligations and health plan requirements. Employers must stay informed and take the necessary actions to comply with these provisions. By fulfilling these obligations, employers can ensure fair and transparent health plan practices and provide employees with comprehensive and equitable coverage. If you would like more information about what you need to do to comply with these requirement simply connect with me or schedule an appointment.