October 13, 2026

Employers who offer healthcare and voluntary benefits should be aware of a growing number of Employee Retirement Income Security Act (ERISA) class actions that challenge plan fiduciaries’ decisions regarding service providers, service provider compensation arrangements, and benefit offerings.

In these class actions, the employees allege that plan fiduciaries retained service providers whose business models or compensation structures caused employees to pay higher healthcare premiums, contributions to self-funded plans, and/or out-of-pocket expenses. They also allege that plan fiduciaries permitted service providers to receive unreasonable compensation in violation of ERISA’s conflict-of-interest rules.

Litigation Expands to Voluntary Benefits

The most recent development in this trend involves lawsuits targeting voluntary supplemental health insurance (SHI) benefits offered through employers.

These lawsuits allege that company fiduciaries allowed insurance and benefits brokers to receive extraordinarily high commissions from insurance companies offering voluntary SHI products to employees. According to the complaints, employees paid more for coverage than they otherwise would have paid if the fiduciaries had negotiated lower commission arrangements or selected alternative products offering greater value.

The lawsuits further allege that the company fiduciaries violated ERISA’s conflict-of-interest rules by paying the brokers excessive and unreasonable compensation from plan assets.

This trend for claims of this type signal an expanding focus on employer-sponsored benefit arrangements beyond traditional healthcare plans and may expose even small and mid-size employers to increased litigation risk.

Voluntary Benefit Risk Mitigation Strategies

There are a number of steps employers can take to reduce the risk of litigation challenging voluntary benefit programs. Two considerations are particularly important.

1. Evaluate Whether the ERISA Safe Harbor Applies

   Employers may be able to structure certain voluntary benefits, such as SHI products, to qualify for ERISA’s voluntary plan safe harbor. See 29 C.F.R. § 2510.3-1.

   If the safe harbor applies, the benefit arrangement may not be treated as an ERISA-covered plan, thereby avoiding many of ERISA’s fiduciary obligations and related litigation risks.

   Although the regulation appears straightforward, federal court decisions demonstrate that employers often struggle to satisfy all of its requirements. Employers should consult experienced counsel to determine whether the safe harbor is available and, if so, how to structure and administer the program to maintain compliance.

2. Carefully Review Service Provider and Broker Compensation

   ERISA requires disclosures regarding service provider compensation. See 29 U.S.C. § 1108(b)(2). Fiduciaries should carefully review those disclosures and evaluate whether compensation arrangements are reasonable in light of the services being provided.

   A prudent fiduciary review may wish to:

   • Make requests for proposals (RFPs) or engage in competitive bidding processes;
   • Benchmark compensation against industry standards;
   • Evaluate alternative fee structures; and
   • Have in-depth discussions with brokers and service providers regarding compensation arrangements and potential conflicts.

   Companies and fiduciaries should work with counsel to ensure their reviews comply with ERISA fiduciary standards and are properly documented.

Can I Avoid This Type of Litigation by Offering an Individual Contribution Health Reimbursement Account?

Only in a very limited sense. Under an ICHRA, the employer makes defined contributions to each employee’s individual account, which employees use to purchase their own individual health insurance policies through a federal or state marketplace or via a private plan outside the marketplace. In this limited sense, the plan fiduciaries are relieved of the burden of picking the coverage and cost for the employees. However, plan fiduciaries are still obligated to select an ICHRA plan administrator that charges no more than reasonable compensation.

Key Takeaway

The recent wave of ERISA class action litigation demonstrates that plaintiffs’ attorneys are increasingly scrutinizing not only traditional healthcare plans but also voluntary benefit offerings and the compensation arrangements associated with them.

Small and mid-size employers should not assume they are insulated from these claims. Careful evaluation of voluntary benefit programs, service provider compensation, and potential ERISA safe harbor opportunities can help reduce litigation risk and strengthen fiduciary compliance.

If you have questions regarding ERISA fiduciary obligations, voluntary benefit programs, or service provider compensation arrangements, please contact Reger Rizzo & Darnall LLP Partner James L. Griffith, Jr. at jgriffith@regerlaw.com or 215-495-6510.