FAQ’s, Tips and Resources for Employers & Advisors with Group Health Plans
The Most Frequently Asked from Employers and Their Benefit Advisors
Who Is a Fiduciary?¹
Many of the actions involved in operating a plan make the person or entity performing them a fiduciary. A person using discretion in administering and managing a plan or controlling the plan’s assets is a fiduciary to the extent of that discretion or control. Thus, fiduciary status is based on the functions performed for the plan, not just a person’s title.
Group health plans can be structured in a variety of ways. The structure of the plan affects who has fiduciary responsibilities. Most employers who sponsor fully or partially self-funded group health plans exercise some discretionary authority and therefore are fiduciaries. If the employer sponsors a fully insured plan, fiduciary status depends on whether the employer exercises discretion over the plan.
Tips for Employers with Group Health Plans³
Understanding fiduciary responsibilities is important for a group health plan’s security and compliance with the law. The following tips may help as a starting point:
Have you identified your plan fiduciaries, and are they clear about the extent of their fiduciary responsibilities?
If you are hiring third-party service providers, have you looked at several providers, given each potential provider the same information, and considered whether the fees are reasonable for the services provided? Have you documented the hiring process?
Are you prepared to monitor your plan’s service providers?
Are you aware of the schedule to deposit participant contributions and payments by participants to the plan?
Have you reviewed your plan document in light of current plan operations and made necessary updates? After amending the plan, have you provided participants with an updated summary plan description or summary of material modifications?
Does your plan have a reasonable claims procedure that plan fiduciaries follow?
Does your plan have a procedure for handling QMCSOs?
Have you identified parties in interest to the plan and taken steps to monitor transactions with them?
Are you aware of the major exemptions under ERISA that permit transactions with parties in interest, especially those important to plan operations (such as hiring service providers)?
Have you filed required reports, such as the Form 5500, with the government in a timely manner?
What Is the Significance of Being a Fiduciary?²
Fiduciaries have important responsibilities and are subject to standards of conduct because they act on behalf of group health plan participants and their beneficiaries. These responsibilities include:
Acting solely in the interest of plan participants and their beneficiaries and with the exclusive purpose of providing benefits to them;
Carrying out their duties prudently;
Following the plan documents (unless inconsistent with ERISA);
Holding plan assets (if the plan has any) in trust; and
Paying only reasonable plan expenses.
Must Plan Sponsors of Group Health Plans Submit RxDC Reporting?
Plan sponsors of group health plans must submit information annually about prescription drugs and health care spending (“RxDC reporting”) to CMS. The first deadline was December 27, 2022 (extended to January 31, 2023) for reporting on calendar years 2020 and 2021. The next deadline is June 1, 2023, for reporting on calendar year 2022.
Have 2022 RxDC Reporting Instructions Been Released?
The Centers for Medicare and Medicaid Services (“CMS”) recently released updated RxDC reporting instructions, the HIOS Manual User Guide, and the HIOS Quick Guide related to reporting 2022 data. While substantially rearranged, the substance of the instructions largely remains the same. The following are the more relevant changes from the prior year:
The enforcement relief available for failure to report average monthly premium paid by employers and members for 2020/2021 reporting is not available for 2022 reporting. Additionally, no other good faith relief has been extended with respect to 2022 reporting at this time.
Changes providing clarification about what should be reported in D1 and D2 files:
Prescription drug rebates should be subtracted from premium equivalents in D1 regardless of whether the rebate received in the reference year is retrospective or prospective
Stop-loss reimbursements should be subtracted from premium equivalents in D1.
Stop-loss reimbursements should not be subtracted from total spending in D2.
Prescription drug rebates expected, but not yet received, should be subtracted from total spending in D2.
Changes to incorporate lessons learned from the first submission date, particularly around making the submission more efficient and more precise.
There is an additional option for a reporting entity to create multiple submissions in HIOS for the same reference year.
Changes related to when reporting is and is not required.
Examples of when wellness services are billed on a claim and thus reportable.
The HIOS Manual User Guide and HIOS Quick Guide have been substantially changed, increasing from 8 pages to 34 pages. The first 3 pages include specific information that registrants should omit.
1,2,3 This content has been developed by the U.S. Department of Labor, Employee Benefits Security Administration (EBSA), Understanding Your Fiduciary Responsibilities Under a Group Health Plan
Resources for Employers
116th Congress
The Consolidated Appropriations Act, 2021
Federal Register
The U.S. Department of Labor - Employee Benefits Security Administration
Publications for Employers and Advisors
Centers for Medicare & Medicaid Services (CMS)
Registration for Technical Assistance Portal (REGTAP)
RxDC Home Page: Submission materials and user manuals
This information is designed to highlight various group health plan and employee benefit matters of general interest to our readers. It is not intended to interpret laws or regulations, or to address specific client situations. You should not act or rely on any information contained herein without seeking the advice of an attorney or tax professional.