On December 30th, 2021, the U.S. Department of Labor (DOL) announced an enforcement policy regarding group health plan disclosure requirements. Specifically, the policy pertains to required fee transparency disclosure under the Employee Retirement Income Security Act (ERISA). The DOL’s Employee Benefits Security Administration (EBSA) released Field Assistance Bulletin 2021-03 which highlights the requirements. Basically, the policy will require certain group health plan providers to disclose specific information to plan fiduciaries about expected compensation. Earlier, on November 2nd, 2021, the DOL issued a new prohibited transaction rules policy for investment advice fiduciaries. 

Overview of the Policy on Group Health Plan Disclosure Requirements

Previously, the Consolidated Appropriations Act of 2021 amended prohibited transaction exemption provisions in ERISA section 408(b)(2). Specifically, the provisions apply to service provider arrangements with ERISA plans. In brief, entities providing “brokerage services” or “consulting” to ERISA-covered group health plans must disclose specific information to plan fiduciaries. Such information must cover compensation that providers expect to be paid in connection with their services to the plan. Furthermore, the requirements cover providers expecting to receive $1,000 or more in compensation in connection with provided services.

Overall, the group health plan disclosure requirements help plan fiduciaries guard against certain conflicts of interest. In particular, these conflicts of interest may occur when plan service providers receive compensation from third-parties. Subsequently, the disclosure requirements ensure that plan fiduciaries receive complete and timely information about such compensation before they enter into, renew, or extend service provider arrangements. These requirements went into effect on December 27th, 2021. 

Highlights in Field Assistance Bulletin 2021-03

According to the DOL, covered service providers are asking about the scope and execution of the group health plan disclosure requirements. Correspondingly, the department released Field Assistance Bulletin (FAB) 2021-03 to support the compliance efforts of covered service providers. Generally, enforcement efforts will focus on providers who do not act in accordance with a good faith, reasonable interpretation of the statute. Additionally, the FAB includes questions and answers covering key issues regarding the statute. Questions and answers include the following:

  1. Q: Does ERISA section 408(b)(2)(B) cover insured and self- insured group health plans?
    A: ERISA section 408(b)(2)(B) applies to group health plans as defined in ERISA section 733(a). This includes both insured and self-insured group health plans, including grandfathered health plans. 
  2. Q: In attempting to comply with the new requirements for group health plans, may covered service providers look to prior Departmental guidance developed for service providers of pension plans?
    A: Yes. Even though certain provisions in ERISA section 408(b)(2)(B) are not identical to the pension plan disclosure provisions in regulation 29 CFR § 2550.408b-2(c), the Department would view it as a good faith and reasonable step for a covered provider to take into account previous guidance regarding providers of pension plans.
  3. Q: Is a plan that provides only “excepted benefits,” such as limited scope dental and vision considered a “covered plan”?
    A: The view of the Department is that limited scope dental and vision plans, although excepted from certain requirements in Part 7 of ERISA, are “covered plans” subject to the requirements of ERISA section 408(b)(2)(B). 

Employer Takeaways

The DOL’s new group health plan disclosure requirements create obligations for employers that offer benefits. Accordingly, covered employers need to notify employees about relevant information pertaining to their plans. Subsequently, employers must ensure that service providers disclose the required information for group health plans.