What Will the Fiduciary Regulation Mean for HSAs?
While the 600 pages of new fiduciary regulations were not specifically targeting health savings accounts (HSAs), these health accounts were explicitly identified as subject to the new rules — a new white paper
outlines the potential impact(s).
As they pertain to HSAs, a new white paper from HSA Bank provides a simplified explanation of the regulations and their impact on HSA administrators, advisers and employers/plan sponsors.
The report notes that employers whose employees have HSAs were not the main targets of the regulations, and that “in most cases these rules will not increase potential risk or liability to employers.”
That said, the article acknowledges that employers may be impacted by the rule if they provide information to their employees about HSAs which crosses the line from general investment education to investment advice, or if they benefit in some way from the advice being given. This could arise in situations such as those where the employer receives some kind of revenue sharing in connection with specific HSA investments suggested by financial planning tools it provides, or an employer receiving bonuses for steering employees towards particular HSA vendors.
Among the steps the paper should be taken in anticipation of the regulation:
- ensuring that the fees charged to participants within their program are appropriate and fully disclosed;
- reviewing their education and communication materials and practices to make sure they are appropriate and do not constitute advice and recommendations;
- potentially changing the investment options within their products; and
- potentially needing new contracts or addendums with employers as a result of the above impacts.
In those situations, the paper notes that most employers are likely to want to scale back those activities and/or revise their compensation arrangements. However, it says that information from other parties like HSA vendors and their own carrier partners, which the employer merely makes available or passes along without endorsement, and investment lineups assembled by platform providers over which the employer has no say, should not have to be taken into account.
Regardless, employers that are plan sponsors of retirement plans subject to ERISA may be directly affected by the rules, and should engage their counsel to begin the work of identifying the steps required to comply with the new regulations.