Tip # 724 - BETWEEN A ROCK AND A HARD PLACE?

Sunday, August 2, 2026

Employers sponsoring group health plans are considered fiduciaries under the Employee Retirement Income Security Act (ERISA, 1974) whenever they exercise discretionary control over the management, administration, or financial assets of the plan.

About this time last year (TIP # 685 HERE), I wrote about a client who had managed to somehow absorb a 39 % premium increase, on top of the 46 % increase the year before.

This year it’s even worse; 67%!!

Given premiums are shared, could renewing be a fiduciary breach? 

Well, ERISA also makes a distinction between fiduciary duties and “settlor functions” which are pure business decisions; e, g., deciding whether to offer a health plan, setting the initial benefit design, altering employee contribution amounts, or terminating the plan!

In this case, premium increases are justified by the chronic and complex health conditions of several employees, coupled with insurance regulations. The employer, however, is left with what seems like a Sophie’s Choice.

Fortunately, dropping the group plan allows these employees (and dependents) an opportunity to enroll in the Obamacare Individual Marketplace. Using an ‘Individual Coverage Health Reimbursement Arrangement (ICHRA), the employer can also cover some of the cost. 

Did Sophie just become Solomon?

Stay tuned.