What HR and Employers Must Know About Fiduciary Responsibility in Self-Funded Health Plans
After years of managing health plans from the HR side, I wish I had known then what I know now. There were things I simply didn’t realize that could have made a real difference for our employees and our budget. Now, having the chance to support other employers from the advisor side, I recently shared some of those lessons with a group of HR professionals—and I want to pass them along here too.
Because HR does have a responsibility to ensure sustainable, high-value benefits for employees and their families, and with the growing push for transparency, it’s finally becoming easier for HR to step into that role and make a real impact.
Understanding Fiduciary Responsibility in Health Plans
If you’re in HR, you probably feel pretty clear on your fiduciary responsibilities when it comes to your company’s 401(k) plan. But what about your health plan?
Here’s the thing: employer-sponsored health plans fall under the same ERISA rules—meaning you have a fiduciary duty to act in the best interest of your employees and their families. And while this has always been the case, we’re finally starting to see more conversations about it.
What’s Driving Renewed Focus on Health Plan Oversight?
There are three major factors bringing this responsibility into sharper focus:
1. Out-of-Control Costs
Healthcare costs continue to rise faster than wages, and employers are feeling the pressure—right alongside their employees. According to PricewaterhouseCoopers’ Health Research Institute, the projected medical cost trend for 2025 is 8%, the highest increase in 13 years. As deductibles and payroll deductions rise, employees are left wondering what they’re really paying for—and employers are being pushed to reevaluate how their health plans are managed.
2. Recent Legal Cases
We’re also seeing more lawsuits where employees themselves are raising concerns—asking, “Is my employer really looking out for my best interest when it comes to our health plan?”
Just last year, three separate lawsuits—Knudsen v. MetLife, Navarro v. Wells Fargo, and Lewandowski v. Johnson & Johnson – were filed with employees as the plaintiffs, claiming that their employers failed to exercise proper oversight of the Pharmacy Benefit Manager (PBM). The lawsuits alleged that hidden fees and questionable pricing structures were contributing to rising out-of-pocket costs—and that employers weren’t doing enough to prevent it.
These cases are a wake-up call. They’re not just about PBMs—they’re about the employer’s fiduciary duty to manage the plan responsibly.
And it’s not just employees taking legal action.
In the case of Tiara Yachts v. BCBSM, the employer discovered that BCBSM had allegedly overpaid claims while administering its self-funded health plan—then implemented a “Shared Savings Program” to recover those overpayments, keeping 30% of the recovered amount as fees. Talk about a conflict of interest. Thankfully, Tiara Yachts challenged the arrangement—and recently won.
These legal challenges are shining a bright light on an employer’s obligation to know what’s happening inside the health plan—and to take action when something doesn’t look right.
3. Modern Legislation
The Consolidated Appropriations Act (CAA), introduced in 2020, made one thing clear: employers have a right to see what’s really happening inside their health plan—from detailed claims data to vendor fees, broker commissions, and PBM compensation. It also bans restrictive “gag clauses” in contracts that prevent providers, TPAs, or other vendors from sharing this information with the plan sponsor.
Put simply, the CAA provides employers with a tool to claim their data and ask questions when they are not receiving the necessary transparency to fulfill their fiduciary duty.
Are You Getting the Data You Need?
You can’t manage what you can’t see.
And while plan sponsors should have full access to their health plan information and claims data, that’s not always how it plays out in the real world. What you’re able to access often depends on two things: the type of plan you have—and who’s administering it.
- Fully insured and under 100 enrolled? You’re probably not getting any claims data at all.
- Fully insured with 100 or more? You might get a few reports—usually de-identified summaries like high-cost claims or top prescriptions—but it’s still pretty limited.
- Self-funded? You should have full access. But that only happens if you’re working with the right partners.
If you’re self-funded and still in the dark, it’s time to start asking questions. It’s your data—claim it, and keep pushing until you have what you need to make informed decisions for your people.
Who Administers Your Plan Matters
Just because you’re self-funded doesn’t automatically mean you’ll get the transparency you need. It depends on who you choose to administer your plan.
Major carriers have a bundled plan design—combining administration, provider networks, and pharmacy benefits into one package. But with that convenience comes a tradeoff: limited flexibility and even less transparency. When everything is under one roof, it becomes much harder to see what’s really going on behind the scenes.
Carriers often cite HIPAA or “reporting limitations” as reasons not to share detailed claims data—but that’s not a valid excuse. As the plan sponsor, you have a right to that data. If you’re not getting it, start asking why.
On the other hand, partnering with an independent Third Party Administrator (TPA)can give you significantly more flexibility. Many TPAs let you choose your own vendors and provide the detailed reporting and claims data needed to actively manage your plan with confidence.Not all self-funded plans are created equal—the partners you choose can make a big difference in how much control and visibility you actually have.
How to Use Your Data: Real-World Examples
Once you have access to your claims data, the next question is: What do you do with it? Don’t worry—you don’t have to become a data analyst. But knowing where to focus can lead to big wins for your plan and your people.
Here are a few real examples that show what’s possible:
1. Start with High-Cost Claims
About 10% of your members are likely driving up to 70-80% of your plan’s total cost. That’s why the high-cost claims report is the most important place to begin. In one case, we found a child receiving $700 infusions multiple times a week at a local hospital. After digging in, we helped the family transition to a home infusion service at just $100 per treatment. Not only did the plan save over $60,000 a year, but the family was incredibly relieved—and better cared for.
2. Spotting Fraud
A defining moment in my career was uncovering blatant fraud—and experiencing firsthand how reluctant a carrier can be to address it.
We noticed a recurring $12,000 biweekly claim that didn’t make sense. When we asked for more details, the carrier pushed back, citing mental health parity as a reason for withholding information. So, we dug into the member’s EOBs ourselves and found the problem: repeated drug testing ordered by a provider in California. It was clearly suspicious. After continued pressure, the carrier finally investigated—and confirmed it was fraud.
The takeaway? You may not catch every issue, but when something doesn’t look right—and you know your people—you’re in a strong position to flag the big stuff.
3. Emergency Room Usage
ER visits are steadily rising and now represent around 5–6% of total plan spend. In many cases, these aren’t true emergencies—they’re often the result of employees being unable to access timely care.
When a plan administrator identifies a trend of high ER utilization, it’s a signal to look deeper—often, the root issue is access. Barriers like high deductibles, expensive copays, or limited primary care availability can push employees to the ER for conditions that could have been addressed earlier and more affordably.
That’s where Direct Primary Care (DPC) comes in. By offering same-day or next-day access to care with no out-of-pocket costs at the point of service, DPC removes those barriers and gives employees a better path to care. It’s a proven way to reduce ER overuse and support better long-term health.
4. Prescription Oversight
Prescription costs are one of the most controllable areas of your health plan—if you’re working with a transparent PBM.
When you have visibility into your top drug spend, there are often several ways to reduce costs: copay assistance, manufacturer programs, lower-cost mail-order options, or switching to generics and biosimilars.
None of those strategies are possible without access to the data. Transparency is the first step to making smarter, more cost-effective pharmacy decisions.
Active Plan Management vs. Medical Cost Trend
Here’s what it looks like when an employer really leans into their fiduciary responsibility and takes an active role in managing their health plan:
A self-funded employer in Asheville approached us in 2019, frustrated with the rising costs associated with a bundled carrier setup. They were ready to do things differently—so they made the switch to an independent, transparent plan design and committed to managing it actively.
The results? Instead of following the projected 74% increase in per member per year healthcare costs over the next decade (based on PwC trend data), their actual plan cost only went up 11%.
That’s the real outcome of active plan management. When you understand your role, have access to your data, and take action, you can beat the trend, protect your budget, and provide better benefits for your people.
This Is Work
Let’s be honest—yes, active plan management takes effort. But you know what else takes effort? Dealing with bad renewals, explaining rising deductibles, and watching employees struggle with care they can’t afford.
The good news? You don’t have to do it alone. With the right partners—your broker, TPA, and PBM—you can start asking the right questions, getting the data you need, and building a plan that actually works for your people.
So if you’re feeling overwhelmed, let this be a message of hope: You can do this. You can build a better health plan.
Lead with Clarity and Confidence
Want to learn how your organization can reduce costs and improve care with a transparent, self-funded health plan? Let’s start a conversation about building something smarter, sustainable, and fully aligned with your fiduciary duty.