News / Events

The Opportunity (and Liability) in Healthcare Fiduciary Guidance

Plan sponsor clients are overwhelmed by new regulations requiring a fiduciary process in healthcare plan design. Top advisor Jamie Greenleaf points to the retirement plan space for answers.

“ERISA has stepped into the healthcare industry, and you’ve got to take note because the possibility of litigation is extremely high.”

It’s the type of comment one would think would generate immediate attention and alarm, but Jamie Greenleaf, Co-Founder of Fiduciary In A Box, is something of a lone voice in the wilderness. While individuals are beginning to realize its significance and the exposure it represents, marketplace acknowledgment of its implication is frustratingly slow.

The passage of The Consolidated Appropriations Act of 2021  means transparency is coming to healthcare, similar to the retirement plan industry. The CAA clearly states the plan sponsor is a healthcare fiduciary, and there’s substantial opportunity for retirement plan advisors with a firm grasp of fiduciary roles and responsibilities to help guide clients—if they can get the word out.

“I’m starting to find like-minded people say, ‘Hey, there’s some real liability here and some real opportunity to bring new solutions to a conflicted [healthcare] marketplace,’” Greenleaf explained. “They’re super excited about the opportunity to disrupt the space. But it’s still challenging because the whole industry is conflicted. They’re all paid by each other, and they can’t sit on the same side of the table as the employer because it directly impacts their bottom line.”

However, due in part to the retirement plan roadmap, she’s optimistic it will change—and faster than its predecessor.

High M&A activity among aggregators might encourage awareness as traditionally siloed business lines merge, but Greenleaf said it’s yet to be determined.

“I think consolidation in the marketplace is taking some of these talented fiduciary consultants and putting them into benefit shops. However, they’re still trying to get through the transition and the change. To take on a new kind of project is difficult.”

Internal politics will also be a factor. Benefit firms will be significantly impacted by fee compression as transparency takes hold.

“There’s a hesitation in allowing the fiduciary consultants to go wild in this space,” Greenleaf argued. “We’re starting to see some of the benefits shops acknowledge that there’s a huge opportunity here if they opt to step up to the plate and start to dig into the weeds and act in a different manner. But there’s still a lot of resistance to it.”

As for plan sponsor clients, they’re overwhelmed and react in a manner similar to the stages of grief. First, they’re irritated that government regulators have once again required these new responsibilities in an area where they have little understanding. They then get angry that their partners, who they believed were doing what was in their best interest, have not. Lastly, they realize that they need to figure it out moving forward. 

“There’s no easy button,” she quipped. “As much as we’re trying to provide one, the fiduciary process is not an easy button.”

Even more alarming are the brokers and TPAs who minimize the threat. 

“The plan sponsor sometimes comes back and says, ‘Oh, no, I spoke to them. We’re all good. We’re taken care of.’ I always say, ‘Well, can you explain what that means? Who’s doing this and who’s doing that?’ They answer that they’ll worry about it at a later date. It’s such a rinse and repeat of what we saw in the retirement space.”

She founded Fiduciary In A Box, a software tool to help to aid employers in making better decisions around healthcare plan design offerings and to help employees make better decisions on what plan would be best for them.

“We’ve worked on an 80-page playbook that we have vetted with litigators to see if we’re missing anything to protect clients. It really outlines a prudent fiduciary process for the employer. If they follow it, they will reduce their liabilities by establishing, adhering to, and documenting a prudent process.”

Published in 401k Specialist, November 11, 2022

Fiduciary In A Box is currently in a closed beta and will launch soon! Sign up below to get notified when we launch:

Submission received, thank you!

Close Window