The Consolidated Appropriations Act of 2021, signed into law at the end of December, brings significant changes with it—not for retirement plan advisors but for health insurance brokers.
Transparency is coming to health care much as it did with the retirement industry. The CAA removes gag clauses on price and quality information and requires 408(b)(2)-style broker compensation disclosure.
“It’s the evolution of fiduciary duty,” said Jamie Greenleaf, managing director and founder of TILT, a health benefits advisory firm. “It’s taking the same path that the retirement industry did 20-plus years ago.”
Her dual role as TILT founder and lead advisor and principal of Cafaro Greenleaf, a high-profile retirement and benefits advisory firm, gives her a unique view of the recent legislation’s impact and the incredible opportunity for retirement plan advisors.
“This is what we saw the retirement space go through, where retirement plan advisors traditionally didn’t take a fiduciary eye to the benefits spend in determining if it was in the best interest of the participant,” she explained. “That’s what’s happening now in health care.”
“I think the bounce that just happened with the CAA, as well as the consolidation and aggregation of retirement advisors with health insurance and property and casualty advisors, is too big of a coincidence to ignore,” Hugh O’Toole, CEO of Pittsburgh-based data analytics firm Innovu, added. “Top tier retirement advisors have perfected running a fiduciary procurement play. This is exactly what the future of healthcare consulting will require. The aggregators with proper execution have a huge opportunity to gain market share.”
Greenleaf referenced a recent whitepaper on the subject from the Wagner Law Group, titled Disclosure to Welfare Plan Participants: A Fiduciary Duty, which explicitly states, “At this point in time, we believe that sponsors of group health plans have a clear ERISA fiduciary duty to provide information to plan participants, to ensure they can make informed decisions in their own best interest. Failure to provide that information should be viewed as a breach of the sponsor’s fiduciary duties and could expose the sponsor to significant liability.”
She sees it as a new business line, to a certain degree, and retirement plan advisors can take their knowledge of ERISA and establish processes and the same kind of framework around the health care space.
“Retirement consultants know more than they think,” she claimed. “They believe that because it’s health care, they won’t understand it, but they do. We do this every day. We look at plan design, and we determine if the company is spending its dollars in the most advantageous way for the employees. We look at transparency and how to teach employees to become better prepared for retirement. The fiduciary processes that we have in place can transfer right into the health care space.”
‘Failed to take seriously’
While health insurance brokers haven’t had a formal fiduciary duty, plan sponsors have, she noted. Yet, it was one they failed to take seriously because they didn’t see the liability in the same way as their retirement plan benefits.
“The broker will now have to disclose their compensation,” she said. “Anything that paid over and above $1,000 is going to have to be disclosed on the Form 5500. Wow, that sounds like what happened in the retirement space.”
TILT, for its part, helps advisors bring a consistent process to how participants select their health care plans and determine if it’s the best “financial avenue for them, short term and long term.” The company then provides transparency around health care costs and the dollars employers spend to “keep more in the employer and employee’s pocket.”
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
