Tuesday Morning With Justin: Healthcare, Leadership & Life
Tuesday Morning With Justin: Healthcare, Leadership & Life
Breaking Down Your Employer's Healthcare Responsibilities: A Fiduciary Deep Dive
Stepping into the often overlooked yet critically important realm of employer responsibilities, today's episode tackles the concept of fiduciary duty in employee health plans. What begins as an admittedly dry-sounding legal term quickly unfolds into a fascinating exploration of how your healthcare decisions are made—and who's accountable when things go wrong.
Did you know your employer has a legal obligation to act in your best interest when selecting and managing your health benefits? The landscape of fiduciary responsibility dramatically changed with the CARES Act, which heightened consequences for employers who fail to properly oversee your healthcare dollars. I break down the four essential pillars of proper fiduciary conduct: serving participants' interests, managing plan assets responsibly, acting prudently through documented decision-making, and diligently selecting service providers.
The stakes couldn't be higher, as demonstrated by recent high-profile lawsuits where employees of corporate giants like JPMorgan Chase and Johnson & Johnson took legal action against their own employers for alleged fiduciary breaches. These cases specifically targeted how companies selected and monitored pharmacy benefit managers—an industry where just three players control over 80% of the market. I share a personal anecdote about being offered a Costa Rica trip by a pharmacy benefit manager (which I declined) to illustrate the conflicts of interest that can compromise your healthcare. Whether you're a CFO, an HR director, or an employee wondering why money keeps coming out of your paycheck each month, understanding fiduciary duty empowers you to ask better questions and demand more transparency. Ready to find out if your company is making healthcare decisions that truly serve your interests?
Music by Alex Lambert.
Contact Justin via text 740-525-5259 or via email JFutrell@TrueNorthCompanies.com
I welcome the opportunity to hear your feedback from this episode!
Thanks again to my musically gifted friend Alex Lambert for the music. Also thanks to Kevin Asehan for the edits.
Welcome to another Tuesday morning with Justin. I'm Justin Futrell, Benefit Advisor at True North Companies, and today we are going to talk fiduciary duty. I know, super exciting. I promise to keep the legal jargon at a minimum and get to the core. But first, what is fiduciary duty? Well, fiduciary duty is what requires employers to make decisions that serve in the best interest of their members and plan beneficiaries. So most transferable in this conversation is the health plan. Right, as we think about the health plan, it is the chief financial officer, the human resources director, to figure out how to have employees' best interest in mind.
Speaker 1:Now, in 2022, there were at True North, my team, myself and everyone spent a significant amount of time educating people, fiduciary leaders, people signing off on these decisions. So think of your executive team at your company and educating them that. Hey, I don't know if you know this, but there's this thing called the CARES document, which was one of those big stimulus packages. There's about 880 pages. Read through it if you want to fall asleep, but seven of those pages are really, really important to you, and here's why really important to you, and here's why they heightened the consequences if you breach your fiduciary responsibility and they just put more work on what it looks like to be a good fiduciary.
Speaker 1:Now, if I were to put it in four buckets, what does it mean to be a good fiduciary? I would think one acting in the best interest of plan participants. Two managing plan assets. Three acting prudently. This is a big one. The word prudent is used often with federal legislation. The concept of prudence relies on the process for making decisions. How do you know, how can you prove you're making a good decision? And four, lastly, selecting and monitoring service providers. One example there service providers, myself included, have to disclose transparently how much compensation we make. And the key distinction there was both direct and indirect compensation. That means if a PBM tries to fly me to Costa Rica yes, that's happened before where I've been offered that, then I would have to disclose that to my client, saying, hey, I'm recommending this pharmacy benefit manager, but, by the way, they're going to put my wife and I up in Costa Rica. Sorry, Ellie, I never told you about that because I thought you might be mad at me, but it's my job to be a good fiduciary for my clients. So I said no, Okay, Focus, Justin, focus. So why is this important? It's important because you may have seen in the headlines that JPMorgan Chase was sued by their own employees for breaching their fiduciary responsibility. You go back to Johnson Johnson in February of 2024, the same thing Employees said you breached your fiduciary duties related to your pharmacy benefit manager selection and oversight.
Speaker 1:How do you know where to start? How do you know if you, as an employee at your company, are wasting money coming out of your paycheck every month? Well, one way to start is by asking your CFO hey, how are you making these decisions for who we hire? And one big thing that comes up is like the pharmacy benefit manager, the big three. We've talked about them before OptumRx, Express Scripts and CVS Caremark. They have over 80% of the market. And if you're a CFO and an employee asks why we're working with those because I've read in the news that they actually don't have our best interest in mind you better get prepared to answer that question.
Speaker 1:And when you have a good broker consultant, then I mean that's my job, right, it's my job to put good options in front of a CFO so that he can say, yes, this is why we made the decision. It's my job to put good options in front of a CFO so that he can say, yes, this is why we made the decision. It's my job to put good options in front of a strategic HR leader so they can say, yes, I will defend why we made this decision. Well, that's all for today, folks.
