Much attention is paid by plan sponsors of tax-qualified retirement plans to their plan’s administrative practices and procedures. However, plan sponsors should also consider a few corollary administrative practices and procedures for health and welfare plans at the beginning of the year by considering the following three “new year” resolutions:
Resolution #1: Make sure health and welfare plan documentation and delegation is current, accurate, and understood.
Plan sponsors should review the documentation that describes who has authority to administer the plan and what decisions are delegated to vendors versus retained by the sponsor. Start with the plan document(s) (including any wrap plan document), insurance contracts or administrative services only (“ASO”) agreements, summary plan description(s) (“SPD”), and any administrative services agreements. Sponsors should confirm that these documents align with actual operations, especially where claims, appeals, eligibility, enrollment, and COBRA are handled by third parties.
Plan sponsors should also confirm that the documents clearly address and are consistent on key governance points, including:
- who is the ERISA “plan administrator” and who is the named fiduciary (if applicable);
- who has authority to interpret the plan, make discretionary decisions, and decide claims and appeals (and whether discretion is intended);
- delegations to internal teams (e.g., HR/benefits, payroll) and to vendors (third-party administrator (“TPA”), carrier, pharmacy benefit manager (“PBM”), COBRA administrator), including any limits and escalation protocols;
- the scope of authority to amend the plan, approve benefit changes, or approve deviations from standard terms (and who can approve exceptions); and
- document hierarchy and conflict resolution (plan document vs. SPD vs. policies vs. vendor communications).
Many plan sponsors find that a formal health and welfare plan committee can provide meaningful advantages over a purely “position-based” delegation model (e.g., delegating administration entirely through one or two roles), particularly for larger employers, employers with complex benefit offerings, or employers navigating increased scrutiny around claims, vendor performance, privacy, and fiduciary governance.
A formal committee helps bring structure and consistency to decisions that can create significant legal and operational risk, such as claims appeals, plan interpretation, discretionary determinations, and vendor oversight. A formal committee can help demonstrate that fiduciary decisions are consistent and actively managed through a structured process. The formal minutes or decision records of a committee can demonstrate procedural prudence, provide clear vendor instructions, and provide better audit trails for amendments and communications if issues later arise or decisions are challenged. A delegated committee can also provide better continuity beyond any single role-holder, providing oversight over cost management and trend analysis, population health strategy, vendor rationalization, and risk management.
Once the appropriate parties or committee members are identified, they should receive both ERISA fiduciary training and confidentiality training if privy to any protected health information or individual claims data. This training should be provided upon appointment/delegation and at least once a year thereafter. Training should reinforce the “dos and don’ts” that commonly create risk in the welfare space, such as making off-script coverage promises, issuing informal eligibility overrides, deviating from claims/appeals timelines, and Health Insurance Portability and Accountability Act (“HIPAA”) and data protection obligations.
Resolution #2: Set a proactive annual calendar for welfare plan governance and vendor oversight.
Unlike retirement plans, welfare plan issues such as enrollment changes, eligibility disputes, claims escalations, leave/COBRA coordination, and vendor issues tend to arise intermittently rather than at prescheduled times throughout the year. A strong annual cadence helps the sponsor stay ahead of both compliance and operational risk before issues become urgent or inconsistent practices develop.
At the beginning of the year, sponsors should set a welfare plan governance calendar that includes, as applicable:
- open enrollment planning, communications, and proofing timelines;
- carrier/TPA/PBM governance meetings (quarterly is often a good baseline), including performance metrics and recurring problem categories;
- claims and appeals governance touchpoints, including review of escalations, exceptions, and any “pattern” denials;
- reviews of required participant notices (e.g., COBRA, HIPAA special enrollment, Children’s Health Insurance Program Reauthorization Act (“CHIPRA”), Women’s Health and Cancer Rights Act (“WHCRA”), Medicare Part D, etc.) and confirmation that vendor workflows match plan terms; and
- a benefits-change and plan-amendment workstream (especially when cost-sharing, network changes, or eligibility rules shift midyear).
Meeting agendas and materials should be distributed in advance, and internal stakeholders should be reminded to review materials ahead of time so that decisions are made deliberately and consistently, not reactively in email threads.
Resolution #3: Keep detailed records of welfare plan decisions, especially exceptions, claims escalations, and vendor direction.
Welfare plan disputes often come down to documentation: what the plan says, what the sponsor communicated, what the vendor did, and why an exception was (or wasn’t) made. Plan sponsors should maintain dated, retrievable records of key decisions and instructions, including:
- minutes or written summaries of governance meetings (even if informal), documenting what was reviewed, what was decided, and why;
- written records of any direction to vendors—particularly where the sponsor escalates a claim, requests reprocessing, approves an accommodation, or interprets ambiguous plan language;
- documentation of plan amendments and the approvals supporting them, and confirmation that the SPD and participant communications were updated accordingly; and
- a controlled process for handling exceptions (eligibility overrides, late elections, premium recoupment, coverage reinstatements), including who can approve, what criteria apply, and how exceptions are documented to avoid inconsistent administration.
As a best practice, circulate decision summaries or draft minutes in advance of the next meeting and approve them as the first agenda item. Where the sponsor has authority to amend the plan or approve material vendor changes, maintain signed evidence of approval (minutes, written consents, or signature packets) and retain supporting backup materials. Over time, these governance habits can meaningfully reduce risk, improve vendor accountability, and help ensure the plan is administered in a way that is both defensible and aligned with the sponsor’s overall benefits strategy.
