While HSAs aren’t normally thought of as a retirement vehicle, the DOL broadened the scope of the rules to include these plans due to their long-term savings and investment aspects. A new report outlines some of the key considerations.
The report from HSA Bank notes that while the general consensus within the industry is that the new regulations do not automatically require employers offering HSA plans to be considered fiduciaries, that will nonetheless be one of the first questions an employer will need to answer for their HSA plan.
According to the report, employers will want to:
- Know and understand the structures of fees within their plans, specifically the flow of money with regard to what and how their providers get paid within their programs.
- Take appropriate measures to ensure that the fees charged to participants within their program are appropriate and disclosed fully.
- Review their education and communication materials and practices to ensure that they are appropriate and do not constitute investment advice or recommendations.
- Potentially make changes to the investment (or vendor) options within their plans.
- Potentially initiate new contracts or addendums with their vendors as a result of the above impacts.
According to the report, the four main areas of concern are account structures, appropriate fees and disclosures, investments, and communication and educational materials.
While ultimately the steps taken to ensure compliance with the rules will be unique to each employer group, the report highlights some foundational components of the rules that hold true in many cases. According to the report, employers will want to know the answers to these questions:
- Where are the funds located, and how are they being protected?
- Are they FDIC insured?
- What criteria are the vendor using to vet the banks or insurance companies that hold cash, and how often are they being evaluated?
- What safeguards are in place to ensure the record keeping and the assets balance for each participant?
- What notice is provided when funds are moved among banks or annuity contracts?
All of these questions are examples of information that the employer will want to ask, understand and document with omnibus structures.
Even if an employer is not a fiduciary under the rule, most will want (or should want) to perform due diligence on their vendors, and arrive at a determination that their vendors are acting in the best interest of their employees.
