More than five years after the Consolidated Appropriations Act of 2021 (CAA 2021) became law, many employers continue to overlook key transparency and compliance obligations. Among the most significant is the requirement for plan fiduciaries to monitor service provider compensation and ensure fees paid by the plan are reasonable. As litigation targeting employer-sponsored health plans increases, courts are placing greater emphasis on fiduciary responsibility and the processes employers use to oversee vendors, control costs, and protect plan participants.

CAA 2021 expanded transparency requirements through prescription drug reporting, gag clause attestations, mental health parity analyses, and enhanced compensation disclosure rules under ERISA Section 408(b)(2). These requirements reinforce the need for clear governance structures and active oversight of plan service providers. Strong compliance practices not only help reduce regulatory and litigation risk, but also support effective benefits plan management by promoting accountability, cost control, operational efficiency, and better outcomes for participants.

Recent lawsuits against major employers have focused on whether plan fiduciaries exercised prudent oversight when selecting and monitoring vendors, managing healthcare costs, and making benefit plan decisions. While outcomes have varied, the cases highlight growing scrutiny of employer health plans and underscore the importance of documenting decision-making processes.

To strengthen compliance, employers should establish formal fiduciary committees, benchmark fees regularly, review vendor compensation disclosures, require transparency from plan partners, and maintain detailed records of decisions. A proactive approach to fiduciary responsibility helps reduce risk, demonstrate compliance, and ensure that benefit plans continue to serve participants’ best interests.

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