Usually, you think of retirement programs when you consider fiduciary liability, like the headline cases of the nineties, like Enron and Rite-Aid, where fiduciaries suffered class action judgments for investing employee funds in company stock.
The Employee Retirement Income Security Act (ERISA) is the law which demands fiduciaries act in the best interests of the employees, not the public or private company. And, it covers all employee benefits, not just retirement.
The duties of the plan or trust fiduciary are simple:
1. Loyalty to the beneficiaries.
2. Prudence and skill of a professional investor or trustee.
3. Diversification of investments to minimize risk.
4. Adherence to the rules set forth in plan documents and/or ERISA and similar laws. Plan documents
must be brought into compliance if they're not simpatico with the law.
This level of professional care is quite high.
In 1996, the Health Insurance Portability and Accountability Act (HIPAA) set regulations and standards regarding the portability of health benefits in reaction to the preexisting conditions clauses of new group health insurance.
Interestingly, HIPAA prohibits discrimination based on health related issues in the premiums charged or the enrollment of employees or family members. Also, it prohibits sharing employee medical records.
With these requirements in mind, now consider the impact of the Affordable Care Act.
Fiduciaries must sorb the new act, a poorly understood and untested health care funding option, into their decision making process. And, they are liable for imprudently applying the cost-benefit analysis to this unknown quantity.
If health insurance is mandatory, what happens with the cafeteria plans of the past? Is it prudent to allow an opt-out of a mandate? Even if the spouse has family healthcare already, couldn't they lose that job?
Much of the potential growing pain into this new era of universal health care cannot be predicted. But fiduciaries are not immune from accountability.
Let professionals review all your plan documentation for flexibility in application, and give your trustees that flexibility. Have other professionals check your fiduciary liability coverage and your directors and officers coverage too.