ERISA Compliance: Hiring Service Providers

        ERISA Compliance: Fiduciary Responsibilities


Hiring a service provider in and of itself is a fiduciary function. When considering prospective service providers, an employer should provide each of them with complete and identical information about the plan and the desired services so that the employer can make a meaningful comparison.

Some actions fiduciaries need to consider when selecting a service provider include:

     • Getting information from more than one provider

     • Comparing providers based on same information
     (for example, services offered, experience and costs)

     • Obtaining information about the provider itself, including financial condition
     and experience with group health plans of similar size and complexity

     • Evaluating information about the quality of the firm’s services, including
     the following (as applicable):

          ◦ The identity, experience and qualifications of professionals who
          will be handling the plan or providing medical services

          ◦ Any recent litigation or enforcement action that has been taken
          against the provider and the provider’s experience or performance record

          ◦ Ease of access to medical providers and information about the
          operations of the health care provider

          ◦ The procedures for timely consideration and resolution of patient
          questions and complaints

          ◦ The procedures for the confidentiality of patient records

          ◦ Enrollee satisfaction statistics

     • Ensuring that any required licenses, ratings or accreditations are up to date
     (for example, insurers, brokers, TPAs, health care service providers)

An employer should document its selection (and monitoring) process, and, when using an internal administrative committee, should educate committee members on their roles and responsibilities.

The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that sets minimum standards for employee benefit plans maintained by private-sector employers. ERISA includes requirements for both retirement plans (for example, 401(k) plans) and welfare benefit plans (for example, group health plans). ERISA has been amended many times over the years, expanding the protections available to welfare benefit plan participants and beneficiaries.

ERISA includes standards of conduct for those who manage an employee benefit plan and its assets, who are called “fiduciaries.” This Legislative Brief includes a set of frequently asked questions (FAQs) to help employers understand the basic fiduciary responsibilities applicable to group health plans under ERISA.