By April Handlir, EHD Compliance Manager
We all need compliance but for a GHP named fiduciary, the stakes are personal. This role carries significant responsibility and the potential for personal liability, even when duties are delegated. Fiduciaries must still prudently select and oversee all parties. That’s why the best practice is clear, do not journey alone! A fiduciary committee helps share oversight and protect those responsible. Responsibility is too great for one person, the solution, a committee. Let us explore who belongs on the committee and how to protect them.
I often hear, “Why is this important now if ERISA was enacted in 1974?” The answer is simple: rising costs. With trillions spent on healthcare and prescription drugs, the stakes are too high to ignore. Just as excessive fees and conflicts once drove litigation in retirement plans, similar risks now exist in group health plans.
A 2026 Chubb ERISA Class Action Exposure Report noted a significant increase in fiduciary litigation in recent years, including a growing number of lawsuits targeting group health plans and voluntary benefit arrangements. According to the report, since 2019 ERISA Class Action lawsuits have increased from zero in 2019, to twenty-eight in 2025.
How can exposure to an ERISA fiduciary lawsuit be avoided?
- Establish a charter.
- Establish a cadence (suggested quarterly).
- Establish a process.
Deciding who should be on the fiduciary committee can be confusing since 401(k) retirement plans and the GHP are both governed by ERISA. The ideas of each operate extremely differently. It boils down to the “practice” as the key difference in plan operation.
Brokers are service providers not fiduciaries due to their lack of discretionary authority and product-based compensation. Making a broker a voting committee member can create conflicts of interest and is considered not best practice. Fiduciary committees should be made up of independent internal decision-makers. A standalone fiduciary can also be used, either internally or through an independent firm, consultant, or ERISA attorney.
The benefits broker plays an integral role in the process as the subject matter expert minus the decision making. Brokers can provide the information needed but the committee leads.
Committee Functions – Employees’ best interest:
- Monitoring and selecting the vendors.
- Validating the cost structure through measurable reasoning.
- Claims oversight.
- Utilization trends.
- Compliance oversight – ERISA, ACA, MHPAEA, HIPAA, etc.
- Plan design, cost containment strategies, and employee contributions.
Broker Functions – Employers’ best interest:
- Market expertise and strategy support.
- Vendor and plan recommendations.
- Data and analytics.
- Implementation and administrative support.
A fiduciary liability insurance policy provides peace of mind for everyone! This policy protects the organization and named fiduciaries from claims of mismanagement or breach, including coverage for judgments, settlements, and defense costs. It can be customized to fit your needs. Please contact your Commercial or Benefits Producer for assistance.
ERISA fiduciary responsibility has always applied to group health plans, but today, the combination of rising healthcare costs, increased transparency, and emerging litigation is driving a new level of scrutiny. Employers that formalize governance, clearly define roles, and document their decision-making processes will be best positioned to manage this evolving risk.
Your EHD partners are here to support the journey.
