Is History About to Repeat Itself in the Health Benefits World?
Is History About to Repeat Itself in the Health Benefits World?
Fifteen years ago, the retirement plan industry was shaken by a fiduciary reckoning that most employers never saw coming. Brokers who had quietly collected undisclosed compensation from investment providers were suddenly required to disclose every dollar, legally sign on as fiduciaries, and operate in the full light of regulatory scrutiny. The firms that hadn’t prepared paid a steep price.
Jay Gepfert lived through that shift from the inside. As Founding Partner of Culpepper RFP, he spent his career in the retirement and 401(k) space — watching the industry transform under the weight of new regulation and aggressive class-action litigation. And today, he sees the same pattern forming in health benefits.
His message to plan sponsors, CFOs, and HR leaders is simple: the tsunami is already building. The question is whether your organization is positioned to weather it — or get buried by it.
What the Retirement Plan Reckoning Taught Us
The transformation of the retirement plan industry wasn’t gradual. It arrived with force: regulatory changes, DOL scrutiny, and a wave of lawsuits targeting plan sponsors and their advisors for conflicts of interest that had been standard practice for decades.
Traditional retirement brokers were forced to stop accepting undisclosed compensation from investment providers, disclose 100% of their fees, and accept a legal fiduciary obligation to their clients. Organizations that had never questioned their vendor relationships suddenly found themselves defending those decisions in court.
“We’ve always done it this way” stopped being a viable defense. Process, documentation, and independence became the new standard.
The Same Forces Are Now Hitting Health Benefits
The health benefits space is not exempt from the forces that reshaped retirement plans. If anything, the complexity — and the exposure — is greater.
Major lawsuits filed at the end of 2025 have already put plan sponsors and benefits brokers on notice, targeting excessive compensation arrangements in voluntary benefits programs and PBM relationships. The Consolidated Appropriations Act (CAA) has significantly expanded ERISA broker compensation disclosure requirements. Regulators have made clear that the standard of fiduciary care that transformed retirement plans now applies to health benefit decisions as well.
For employers, the risk is not theoretical. It is active.
Hidden Compensation and the Conflict of Interest Problem
At the center of this emerging liability is a problem most plan sponsors don’t even know they have: their benefits broker may be receiving compensation they haven’t disclosed.
Broker overrides, administrative fees, per-member-per-month payments, and rebate splits from PBMs and insurance carriers have been a quiet feature of the health benefits market for years. These arrangements create a direct conflict between what is best for the plan and what is financially advantageous for the broker. Under the CAA and ERISA, those conflicts must be disclosed — and increasingly, they must be eliminated.
When a broker is financially incentivized to steer an employer toward a particular vendor, carrier, or PBM — regardless of whether it is the best fit for the plan — that is not independent advice. It is a conflict. And when that conflict goes undisclosed, it becomes a liability.
What It Actually Means to Act as a Fiduciary
The term “fiduciary” is used frequently in benefits conversations. It is understood less often.
A fiduciary is legally required to act solely in the interest of the plan and its participants. Not in the interest of their firm. Not in the interest of their preferred vendors. Not in the interest of maintaining a comfortable incumbent relationship. The legal obligation is unambiguous: the plan sponsor’s interests come first, always.
For employers, that obligation doesn’t rest only with their brokers or consultants. It rests with them. The plan sponsor is the fiduciary. If the process used to select and oversee vendors is not independent, documented, and defensible, the organization carries the risk.
Why Process Is the Only Real Protection
When fiduciary decisions are challenged — in a DOL investigation, in litigation, or under regulatory audit — courts and regulators don’t start with outcomes. They start with process.
Was there a written evaluation? Were competing vendors assessed on consistent criteria? Was broker compensation fully disclosed before a decision was made? Was the decision documented in a way that demonstrates independent judgment?
Without a rigorous, documented RFP process, even a good vendor decision is difficult to defend. With one, even an imperfect outcome can demonstrate that the plan sponsor met their fiduciary obligation.
This is the core of what Culpepper RFP does. Not just vendor evaluation — fiduciary-grade process that creates an audit trail employers can stand behind.
The Questions Every Employer Should Be Asking Right Now
Whether you are currently evaluating your health benefits broker, your PBM, or your overall vendor relationships, these are the questions that define your exposure:
• Has your broker provided a complete, itemized accounting of all compensation received from vendors, carriers, or PBMs — direct and indirect?
• When was the last time you conducted a formal, independent evaluation of your benefits broker or health plan vendors?
• Do you have documentation that would allow you to reconstruct your vendor selection process if it were challenged?
• Is your current RFP or evaluation process being run by your incumbent broker — and if so, who is auditing the auditor?
• Does your CAA broker compensation disclosure reflect the full scope of what is being received — or the minimum required to technically comply?
If any of these questions produce hesitation, that hesitation is the risk.
The Wake-Up Call Is Already Here
The retirement plan industry had the benefit of watching the regulatory storm build before it hit. Health benefits plan sponsors do not have the same runway.
The lawsuits have been filed. The regulatory framework is in place. The standard of fiduciary care is being enforced. Organizations that move now — with a rigorous, independent evaluation process and full transparency around broker compensation — will be in a fundamentally different position than those who wait.
History does not have to repeat itself. But ignoring it has consequences.
To hear this topic in depth, give a listen to the full interview with Jay Gepfert speaking with Spencer Smith on the Self Funded podcast on Youtube: https://youtu.be/wGBS9HL6tUc?si=ciAgD8wf5xz-H4Jv
@SelfFunded on YouTube - https://www.youtube.com/@SelfFunded
Listen/watch on Spotify - https://open.spotify.com/show/1TjmrMrkIj0qSmlwAIevKA?si=068a389925474f02
Follow Spencer on LinkedIn - https://www.linkedin.com/in/spencer-smith-self-funded/
About Culpepper RFP
Culpepper RFP provides independent, fiduciary-grade evaluation services for retirement plan and health benefit vendor searches.
With no financial relationships with brokers, PBMs, or carriers, Culpepper RFP helps plan sponsors conduct rigorous, documented RFP processes that satisfy regulatory scrutiny and protect the organization.
If your organization is ready to evaluate your current vendor relationships or initiate a formal, independent search process, contact Culpepper RFP to discuss scope, timeline, and next steps.
