PBM and vendor compensation

CAA 408(b)(2) fee disclosure for health and welfare plans

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Plan Sponsors: do you know how much you’re paying your vendors? You’d better!

The Consolidated Appropriations Act of 2021 (CAA) extended Section 408(b)(2) fee disclosure rules to health and welfare plans.

If you’re a plan sponsor, here’s your to-do list:

1. Request vendor fee disclosures (Don’t wait—they may not come to you proactively).

2. Review fee disclosures for reasonableness with your fiduciary committee.
• Need help? Consider a third-party consultant.

3. Update governance delegations to include health and welfare plans.

4. Document your fiduciary training—comprehensive and periodic.

5. Understand the consequences of non-compliance—failure to obtain required fee disclosures now represents a per se fiduciary breach, potentially exposing you (and other fiduciaries) to legal and financial liability.

P.S., if you read through this and thought “but I don’t have a fiduciary committee, governance, or training,” shoot me a DM.

Sources

  • ERISA § 408(b)(2), 29 U.S.C. § 1108(b)(2)
  • Consolidated Appropriations Act, 2021

Originally posted on LinkedIn, where the discussion and source links live in the comments.

About the author

Chris Vanderwolk is Director of Compliance and Innovation at OneDigital | Kistler Tiffany Benefits General Agency, where he helps brokers and employers navigate the regulatory complexity of employee benefits. An ERISA attorney with more than 19 years in the benefits industry, he specializes in translating what the law actually requires into language people can use.

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