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Hidden Fees in Self-Funded Health Plans: Reading Between the Lines

Don't forget to read the fine print - your fiduciary risk is high if you don't
Don't forget to read the fine print - your fiduciary risk is high if you don't

TL;DR: Just as 401(k) lawsuits exposed excessive fees, hidden costs in self-funded health plans are now under the spotlight. Employers must learn to spot them — or risk financial leakage and fiduciary liability.

Introduction

The next “401(k) fee crisis” won’t be about retirement plans — it’s happening in healthcare. Self-funded plan sponsors face a wave of hidden costs buried in ASO, PBM, and stop-loss contracts. What appears to be routine administration often masks charges that drain plan assets and compromise compliance.

Where Hidden Fees Hide

Every hidden fee siphons dollars directly from member benefits
Every hidden fee siphons dollars directly from member benefits

Plan sponsors should be on guard for:

  • Shared Savings Fees – Paying vendors a cut of “savings” on claims that should never have been billed in the first place.

  • Recovery Fees – TPAs charging 25–40% to fix their own errors and return plan dollars.

  • Repricing / Network Access Fees – Add-on charges to apply a contract discount.

  • Duplicate Admin Fees – Double-billing for claim processing, “special handling,” or stop-loss coordination.

  • Data & Reporting Fees – Paying to access your own claims information.

Why It Matters

Every hidden fee siphons dollars directly from member benefits. Worse, courts and regulators are increasingly treating these costs like the excessive 401(k) fees of a decade ago — a fiduciary risk that can’t be ignored.

How to Protect Your Plan

  • Read between the lines – Fee schedules and contract terms often obscure the real costs.

  • Benchmark and audit – Independent reviews uncover charges that vendors gloss over.

  • Engage expert counsel – A seasoned ERISA attorney like Julie Selesnick can spot traps buried in vendor contracts.

  • Use independent oversight – ClaimInformatics exposes hidden fees, enforces transparency, and ensures plan recoveries flow back to the employer.

Conclusion

Hidden fees aren’t line items—they’re buried landmines—employers who don’t dig deeper risk fiduciary exposure and wasted plan assets. With the right legal guidance and independent auditing, committees can effectively protect participants, enhance compliance, and reduce costs.

👉 Bottom line: Watch for hidden fees, document oversight, and don’t go it alone.
 
 
 

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