After numerous delays, the Department of Labor put its final fiduciary rule, which was issued on April 8, 2016, into partial effect on June 9 this year, but with enforcement full implementation on January 1, 2018. The Final Rule, which explicitly reiterates its scope to cover Health Savings Accounts (HSAs), raises new potential issues for HSAs by the Final Rule’s expansion of “investment advice fiduciary” under the Employee Retirement Income Security Act of 1974 (ERISA).
Such an “investment advice fiduciary” is one who has “any authority or control” over plan assets or anyone who renders “investment advice for a fee or other compensation, direct or indirect,” regardless of whether that person has direct control over the plan assets.
Here are two key ways the expansive rule may impact employers and their HSAs:
HSA vendors retained by employers to manage their HSAs may be considered fiduciaries. If labeled as fiduciaries, these vendors must follow fiduciary requirements, including the identification of their status as fiduciaries. Employers, check to see if your HSA vendors have identified their fiduciary status in the HSA vendor agreement, are fiduciaries, and that they will be complying with fiduciary requirements.
Employers, as plan sponsors of the HSA, will want to ensure that their HR departments do not cross the line from simply providing “investment education” into “investment advice.” This comes into play when an employer has a financial arrangement with the HSA vendor such as a revenue sharing or bonus arrangement. An example of “investment education” would be information about plan options that is not individualized. This would be in contrast to “investment advice,” which may be recommendations to specific employees that could be viewed as influencing the employee investment decisions in their HSAs.
