Determining Reasonableness


What are ERISA & the CAA talking about?

As fiduciaries, employers are required to determine if the fees they pay (for welfare benefits plans), in exchange for the services provided, are “reasonable.” It is every fiduciary’s responsibility to pay no more than reasonable fees or risk the possibility of the payments being deemed Prohibited Transactions. 

The factors that make up “reasonable” fees

There is no mandated formula for determining if fees are “reasonable.” What ERISA and the CAA require is that employers establish and document a prudent fiduciary process to consider the “reasonableness” of fees paid and services received.


When evaluating service provider fees, fiduciaries should consider more than the dollar amount. OneVision’s independent benchmarking analyses identify a vendor’s true COST™, empower fiduciaries to determine the reasonableness, and document their process:

Health Plan Vendor COST™ factors: Compensation + Outcomes + Services + Transparency

Compensation: The total compensation earned by a vendor in association you’re your benefits plan. Compensation may be generated from several sources. It is important to understand a vendor’s total earnings in order to determine reasonableness.

Outcomes: The overall impact the benefits plan has on participants over time. Outcomes are the ultimate measurement of the plan’s performance. There are several ways to evaluate outcomes. It is important to understand the impact of a vendor’s services on plan performance.

Services: The services each vendor offers. Some services are bundled and standardized across all providers. Others are non-standard and come with additional costs. It is important to understand the services you receive, and the charges associated with each of them.

Transparency: Some vendors are fully transparent and proactively offer clear and complete information regarding their fees, services, conflicts of interest, and other pertinent information. Others do not. There is value in transparent communication.

The CAA clearly identifies the plan fiduciary as the employer and gives them the fiduciary responsibility of determining if each plan vendor’s fee is reasonable. 

How can OneVision help?

OneVision provides the industry’s most comprehensive, conflict-free employee benefit plan and vendor benchmarking service.

  • OneVision’s data is obtained directly from the source – the health plan sponsors, TPAs and brokers/consultants who service the plans. Our comprehensive databased represents over 70,000 employers and includes data on plan design, premiums, fees, services, and more.
  • OneVision’s proven method hinges upon constructing insightful benchmark groups of comparable plans, based on geographic location, size, and industry, to provide a balanced assessment of the relationship between Compensation, Outcomes, Services & Transparency.
  • OneVision’s independent, unbiased reports are designed to be simple, insightful, and actionable. They are a logical addition to any prudent fiduciary process.


In a recent survey 88% of employers said they would hire an independent firm to perform and benchmark their broker after learning about their duties under Consolidated Appropriations Act (CAA)

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