Self Funding Raises the Fiduciary Stakes for US Employers

In September 2026, Insurance Business reported findings from The Phia Group’s 2026 broker survey showing that the rapid move toward self-funded health plans is outpacing many US employers’ fiduciary processes.

The survey covered 124 benefits brokers and advisers. Seventy-six percent said their book of business had shifted toward self-funding during the previous 12 months, but only 12% were very confident that clients had adequate fiduciary processes. The gap matters because self-funding changes more than the financing mechanism. The employer becomes the plan sponsor and assumes direct responsibility for the way plan assets are used, vendors are monitored and benefit decisions are documented under the Employee Retirement Income Security Act (ERISA).

Cost remains the visible reason for the shift. Employers want greater control over plan design, access to claims data and the opportunity to retain savings when experience is favourable. Yet the same model gives them greater exposure to high-cost claims, pharmacy spending, administrative errors and litigation. A plan that is financially sophisticated but weakly governed can therefore exchange premium volatility for fiduciary risk.

Visibility Is Becoming a Governance Requirement

The survey suggests that many sponsors cannot yet see enough of their own plan. Seventy-eight percent of brokers reported no working visibility into clients’ performance under the No Surprises Act and its independent dispute resolution process. Sixty-two percent described visibility into subrogation and recovery as limited or very limited. Only 4% reported strong visibility into recovery opportunities and dollars retained.

Those figures illustrate a practical problem. Employers cannot assess whether a third-party administrator, pharmacy benefit manager or recovery vendor is acting in participants’ interests if the contract does not provide usable data. Periodic dashboards are not a substitute for access to claim-level information, fee schedules, rebate flows, denial patterns and recovery outcomes. The sponsor also needs a record of the questions asked, the answers received and the decisions taken.

Pharmacy is an especially sensitive area. Twenty-seven percent of surveyed brokers identified PBM transparency and rebates as a leading client concern, while 18% named pharmacy and specialty drug costs as the largest pressure point. The issue is no longer confined to price. It includes whether rebates are passed through, how formularies are constructed, which entities earn fees and whether alternative arrangements have been tested.

A Minimum Control Framework for Plan Sponsors

A credible governance framework starts with named fiduciaries and clear decision rights. The employer should know which committee approves plan design, selects vendors, reviews claims trends and handles exceptions. Minutes should record the evidence considered and the reasons for material decisions. Delegating administration does not eliminate the sponsor’s duty to select and monitor service providers prudently.

The second requirement is a contract and data inventory. Each service agreement should identify all direct and indirect compensation, audit rights, data ownership, performance standards and termination assistance. Sponsors should test whether they can obtain complete data in a portable format before signing or renewing an agreement. They should also reconcile invoices and reported savings with underlying transactions rather than relying only on a vendor’s summary.

Finally, sponsors need a regular review cycle. Quarterly monitoring can cover claims, pharmacy, denials, appeals, network performance, surprise-billing disputes and recoveries. An annual fiduciary review should compare outcomes with benchmarks, evaluate conflicts and document whether contracts remain reasonable. Brokers and consultants can facilitate the process, but the employer must retain informed oversight.

Stop-loss governance should be included in the same cycle. Sponsors need to understand exclusions, laser provisions, reimbursement delays and the way large claims are reported. A low premium can conceal restrictive terms or a mismatch between the plan document, administrator procedures and the policy. Reviewing those interfaces reduces the risk that a valid employee claim becomes an unrecoverable employer cost.

For multinational groups, the US plan should not sit outside global benefits governance simply because its legal framework is local. Group-level reporting can connect US self-funded risk with captive strategy, stop-loss purchasing, employee experience and global vendor management. The survey’s central message is: self-funding requires both a strong financial case and a mature governance system.