What 408(b)(2) Disclosures Mean for Executives of Employers Sponsoring Health & Welfare Plans

The Consolidated Appropriations Act (CAA) extended 408(b)(2) disclosure requirements to employer-sponsored health and welfare plans, and they carry real implications for senior executives who sponsor those plans.

At a high level, these rules are about demonstrating transparency, reasonableness, and accountability—and they place CEOs and CFOs squarely in the fiduciary seat.

What Are 408(b)(2) Disclosures?

Section 408(b)(2) originates in ERISA, the federal law governing employee benefit plans. Historically, it required covered service providers to retirement plans. 

The Consolidated Appropriations Act (CAA) extended these disclosure requirements to group health and welfare plans, including medical, dental, vision, and prescription drug plans.

Any covered service provider to a group health plan—including brokers, consultants, and advisors—who reasonably expects to receive $1,000 or more in direct or indirect compensation in connection with the plan must disclose, in advance of entering into or renewing an engagement:

  • The services they will provide.
  • All direct and indirect compensation they expect to receive.
  • Any relationships or arrangements that could create conflicts of interest.

Why This Matters to CEOs and CFOs

Under ERISA, as plan sponsor the employer is the fiduciary, not the broker or carrier.

That means executives such as CEOs and CFOs who oversee the plan are responsible for:

  • Ensuring required disclosures are received.
  • Understanding what those disclosures actually say.
  • Determining whether total compensation is reasonable for the services provided.

Importantly, fiduciary responsibility is not satisfied by simply collecting documents and filing them away. Regulators expect plan sponsors to review and evaluate the information.

If compensation is excessive, opaque, or unjustified—and no action is taken—the liability risk rests with the employer.

The Shift from “Trust” to “Demonstrate”

Many employers have long relied on trusted broker relationships, often spanning decades. While trust still matters, it is no longer sufficient.

The new disclosure regime signals a broader shift:

  • From assumed fairness to documented reasonableness.
  • From informal oversight to defensible process.
  • From “we didn’t know” to “we should have known.”

Final Thought

The intent of 408(b)(2) is not to burden employers—it is to ensure that the people paying for benefits understand where the money goes and why.

For CEOs and CFOs, the opportunity is to move from passive sponsorship to confident fiduciary oversight—reducing risk while ensuring employees receive real value for every dollar spent.If you approach these disclosures thoughtfully, they become less of a compliance exercise and more of a strategic advantage.