September 18, 2015

Employee Benefits Security Administration

Office of Regulations and Interpretations

U.S. Department of Labor

200 Constitution Avenue, NW

Room N-5655

Washington, DC 20210

Re: Definition of the Term “Fiduciary;” Conflict of Interest Rule –

Retirement Investment Advice - RIN 1210-AB32

Submitted electronically: e-ORI@dol.gov

Dear Sir or Madam:

The Blue Cross Blue Shield Association (“BCBSA”) and America’s Health Insurance Plans 

(“AHIP”) appreciate the opportunity to provide supplemental comments with respect to the 

Department of Labor’s (the “Department”) notice of proposed rulemaking concerning the 

definition of the term “Fiduciary” in connection with investment advice published on April 20, 

2015, 80 Fed. Reg. 21928 (the “Proposed Rule”).

BCBSA is a national federation of 37 independent, community-based, and locally-operated Blue 

Cross Blue Shield Plans (“Plans”) that collectively provide health care coverage for 105 million 

– one in three – Americans. Blue Cross Blue Shield Plans offer coverage in every market and 

every ZIP Code in America. Plans also partner with the Government in Medicare, Medicaid, the 

Children’s Health Insurance Program, and the Federal Employees Health Benefits Program.

AHIP is the national association representing approximately 1,300 health insurance plans that 

provide coverage to more than 200 million Americans. AHIP’s member health insurance plans 

offer a broad range of health insurance products in the commercial marketplace (including 

disability, long-term care, supplemental, and life insurance coverage) and also have 

demonstrated a strong commitment to participation in public programs.

AHIP and BCBSA would like to take this opportunity to follow up on a few key items related to 

health and welfare insurance and HSAs/Archer MSAs discussed during our joint testimony on 

August 10, 2015 at the public hearings. 
September 18, 2015

Page 2

Health and Welfare Plan Insurance Policies

We were pleased that during the hearing the Department publically stated that it does not believe 

that recommendations or advice to purchase insurance contracts funding an ERISA-covered 

health or welfare plan constitutes “investment advice” under the Proposed Rule (or under the 

Department’s existing regulation). However, we continue to believe that there is sufficient 

ambiguity under the Proposed Rule which warrants action on the Department’s part to clearly 

carve out such recommendations from the Proposed Rule. 

Under the Proposed Rule, a person renders investment advice with respect to “other property of a 

plan” if he or she provides any “recommendation” as to “the advisability of acquiring, holding, 

disposing or exchanging securities or other property”, if such recommendation is provided under 

an arrangement, understanding or agreement that it is individualized or specifically directed to 

the recipient. The Proposed Rule does not distinguish between employee welfare plans and 

employee pension plans. A “plan” is defined as “any employee benefit plan described in section 

3(3) of the Act and any plan described in section 4975(e)(1)(A) of the Code . . . .” (29 CFR 

§2510.3-21(f)(2)(i)). The Proposed Rule also does not define “other property of a plan” as used 

in the Proposed Rule. However, plan assets in other contexts are intended to include insurance 

contracts themselves that fund the plan (see section 401(b)(2)). In addition, under longstanding 

ERISA rules, participant contributions by employees to fund health, disability, and insurance 

benefits, are considered plan assets and would therefore be subject to the Proposed Rule (see 29 

CFR §2510.3-102). 

During the hearing, Department officials stated that under the existing investment advice 

regulations recommendations to purchase health and welfare insurance contracts are not covered 

investment advice. Unfortunately, there is case law that substantiates our concerns. For 

example, one court held that a consultant was an advice fiduciary when recommending various 

types of insurance contracts, including those with “optometric and dental services.” Brink v. 

DaLesio, 496 F. Supp. 1350, 1374 (D. Md. 1980), affirmed and reversed on other grounds, 667 

F.2d 420 (4th Cir. 1981). 

The Fifth Circuit’s decision in American Federation of Unions Loc. 102 Health & Welfare Fund 

v. Equitable Life Assurance Society of the U.S. lends additional support to our concerns. In the 

American Federation case the court ruled that an agent and insurance company did not become 

fiduciaries when giving a health and welfare benefit fund advice to self-insure instead of 

purchasing a health insurance contract “because the advice was not given on a regular basis 

pursuant to a mutual agreement for a fee.” 841 F.2d 658, 664 (5th Cir. 1988). The decision, 

however, indicates that nothing in the Department’s existing fiduciary definition regulation 

clearly exempts health and welfare contract recommendation from the scope of the rule. 
September 18, 2015

Page 3

Since the Department believes that recommendations regarding health and welfare insurance 

contracts do not constitute investment advice, it is important to provide clear guidance to avoid 

needless litigation risk to insurers. The need for a carve-out is especially imperative given the 

robust new requirements that are imposed on persons that provide investment advice under the 

Proposed Rule (e.g., compliance with the BIC exemption, or revised exemption PTE 84-24). 

Our view is that an appropriate carve-out would cover recommendations and advice to select any 

health and welfare insurance contract and that the carve-out must be unconditional (e.g., no 

disclosure and consent by the plan sponsor should be required). In addition, while we 

understand that the Department may believe there is not much confusion around this point, we 

request a firm carve-out, rather than interpretive language in the preamble, to be consistent with 

the carve-outs that address activities many in the industry have never believed constituted 

“investment advice” (e.g., offering a broad, non-customized “platform” of investment options as 

never been viewed as investment advice). 

As mentioned in our testimony, we continue to believe that the cleanest approach is to simply 

exclude health and welfare plans entirely from the Proposed Rule by carving out any plan 

described in section 3(1) of the Act. However, if the Department is not willing to provide such 

relief (as it did under the section 408(b)(2) regulations), we suggest a clear carve out for 

insurance contracts issued to such plans. As such, we recommend the adoption of the following 

specific carve-out language. 

Proposed “carve-out” language for 29 CFR §2510.3-21(b):

Insurance policies providing benefits to health or welfare plans. The person provides advice with 

respect to an insurance policy or contract that provides benefits in connection with a health or 

welfare benefit plan as defined by section 3(1) of the Act. 

Health Savings Accounts and Archer Medical Savings Accounts

HSAs and Archer MSAs are explicitly covered by the Proposed Rule even though they are 

clearly not retirement accounts. Instead, HSAs and Archer MSAs are tax-advantaged accounts 

that may be used to fund medical cost sharing and other eligible medical expenses not covered 

by a high deductible health plan. Amounts are usually held in bank accounts so that assets are 

preserved and accumulate tax free to pay current medical costs. Generally, only if an account’s 

assets exceed a few thousand dollars are amounts available to invest in a limited array of mutual 

funds. Otherwise, amounts are held in bank deposit accounts or money market funds. The 

average HSA account balance at the end of 2014 was $1,933. Average account distributions 
September 18, 2015

Page 4

were $1,951 and 80% of HSAs that received a contribution also incurred a distribution. Only 6% 

of HSAs have investment options.1 

Nonetheless, the Proposed Rule specifically includes HSAs and Archer MSAs in its definition of 

covered plans. As such, virtually any information provided to an accountholder could constitute 

fiduciary advice. In addition, an HSA or Archer MSA custodian such as a bank may be a 

fiduciary simply by making investments available because the Proposed Rule’s platform carveout does not extend to HSAs and Archer MSAs (and IRAs generally). This is inappropriate 

given the limited investment opportunities available through these accounts, which are not 

retirement vehicles in any way. 

Any rulemaking by the Department should recognize that HSAs and Archer MSAs are not 

retirement vehicles and that providing information to individuals how these accounts operate is 

not “investment advice”. Otherwise, health insurers and financial institutions that offer HSAs or 

Archer MSAs will likely provide less information to consumers about how the accounts and their 

related high deductible health plans work together. Less information provided to consumers in 

today’s dynamic health care market place will not foster the Department’s policy goal of 

regulating conflicts of interest by financial advisers. AHIP and BCBSA continue to believe that 

a complete carve-out for HSAs and Archer MSAs is warranted since these arrangements are 

clearly not retirement vehicles. 

However, if the Department does not accept this recommendation, we suggest that the 

Department address these concerns by expanding the platform carve-out and clarifying the 

application of the investment education carve-out.

1. The Proposed Rule’s platform carve-out should be expanded to cover investment 

options offered by HSA providers.

We believe a service provider offering a menu of pre-selected investment options in connection 

with an HSA or Archer MSA for use by either an employer or individual account owners should 

be subject to relief given the nature of these accounts as non-retirement vehicles. The platform 

carve-out should be amended as follows:

Proposed language for 29 CFR §2510.3-21(b): 

(3) Platform providers. 

 

1 Employee Benefits Research Institute, Health Savings Account Balances, Contributions, Distributions, and Other 

Vital Statistics, 2014, July 2015.
September 18, 2015

Page 5

The person merely markets and makes available to an employee benefit plan (as described in 

section 3(3) of the Act), without regard to the individualized needs of the plan, its participants, or 

beneficiaries, securities or other property through a platform or similar mechanism from which a 

plan fiduciary may select or monitor investment alternatives, including qualified default 

investment alternatives, into which plan participants or beneficiaries may direct the investment 

of assets held in, or contributed to, their individual accounts, if the person discloses in writing to 

the plan fiduciary that the person is not undertaking to provide impartial investment advice or to 

give advice in a fiduciary capacity.

(b) The person merely markets and makes available to a plan (as described in section 

4975(e)(1)(D) and (E) of the Code) a menu of pre-selected investment options without regard to 

the individualized needs of the plan, its participants, or beneficiaries, securities or other property 

through a platform or similar mechanism, if the person discloses in writing to the plan fiduciary 

that the person is not undertaking to provide impartial investment advice or to give advice in a 

fiduciary capacity.

2. Discussion and examples should be added showing the education carve-out 

covers advice by HSA and Archer MSA providers.

While we believe that the education carve-out covers the provision of certain educational 

information regarding HSAs and Archer MSAs by the reason of the definition of IRA, including 

preamble language discussing the application of these carve-outs to fact patterns involving such 

accounts would provide greater certainty to health plans and account custodians and foster a flow 

of relevant information to consumers. 

Proposed preamble language:

In response to comments, the Department wishes to confirm that HSAs and Archer MSAs are 

covered by the investment education carve-out. For example, the investment education carve-out 

would cover actions by an HSA custodian or health insurer in describing the function and 

interaction of an HSA with a high-deductible health plan. Permitted information would include 

the importance of making contributions to the HSA, what are “qualified medical expenses”, how 

claims can be submitted and reimbursed by the HSA, how the investment features of the HSA 

work, what investment options are available, and asset allocation strategies for the HSA. This 

information could be provided via call centers, brochures, and web-based tools provided by the 

health insurer, as well as information provided by insurance agents and brokers. 

* * *
September 18, 2015

Page 6

We appreciate the opportunity to provide comments regarding the Proposed Rule and look 

forward to continuing to work with you as you finalize and implement this regulation. If you 

have any questions, please contact Jane Galvin at jane.galvin@bcbsa or 202-626-8651 or Tom 

Wilder at twilder@ahip.org or 202-778-3255. 

Sincerely,

Thomas J. Wilder Justine Handelman

Senior Counsel Vice President/Legislative and Regulatory Policy

America’s Health Insurance Plans Blue Cross and Blue Shield Association