Health and welfare plans are mostly exempt from the Department of Labor (DOL)’s final fiduciary rule, the exception being where they have an investment component. If a health savings account (HSA) allows for investing, anyone giving investment advice will need to enter into a best interest contract (BIC) with the plan sponsor or participant.
Because many HSA administrators are banks, and therefore accustomed to acting in a fiduciary capacity, they may have an easier time complying with the new rules than will non-bank administrators, says Kevin Robertson, senior vice president, director of sales at HSA Bank in Milwaukee. Regardless of how the HSA administrator is structured, though, it will likely need to take several actions, including:
- Ensuring fees charged to participants are appropriate and fully disclosed;
- Reviewing education and communication materials and practices to make sure they do not constitute advice and recommendations;
- Potentially changing the investment options within its products; and
- Potentially needing new contracts or addendums with employers, as a result of the above.
In most cases, the rules will not increase employers’ potential risk or liability, Robertson says. But employers may feel the impact if information they provide to their employees crosses the line from general investment education to investment advice, or if they benefit from the advice being given. Examples of the latter might be advice in connection with specific HSA investments suggested by financial planning tools it provides, or an employer receiving bonuses for steering employees toward particular HSA vendors. Most employers in such situations may want to scale back those activities and/or revise their compensation arrangements, Robertson suggests.
Information from HSA vendors and their carrier partners that the employer merely makes available without endorsement, and platform providers’ investment lineups over which the employer has no say, generally need not be taken into account.