H.R. 2041 — Hidden Fee Disclosure Act of 2025

This section revises the fee disclosure requirements for covered service providers under the ERISA prohibited transaction exemption for reasonable service contracts (29 U.S.C. 1108(b)(2)(B)). Specifically, it (1) expands the services clause to cover "Services (including brokerage services)" in subitem (AA) (previously "Brokerage services") and "Other services" in subitem (BB) (previously "Consulting"), including plan design, claim repricing, insurance product selection (including vision and dental), recordkeeping, medical management, benefits administration selection (including vision and dental), stop-loss insurance, pharmacy benefit management, wellness design and management, transparency tools, group purchasing organization services, preferred vendor panels, disease management, compliance services, employee assistance programs, third-party administration, and consulting related to such services (previously limited to services related to plan design development or implementation); and (2) requires disclosure of compensation by service (previously, either in the aggregate or by service). (Thus, plans receive more detailed, service-specific information on service provider compensation to assess reasonableness.)

This section revises the service provider disclosure requirements under ERISA section 408(b)(2) (exempting reasonable contracts or arrangements with parties in interest from prohibited transaction rules in section 406, subject to fiduciary disclosures) as follows: (1) treats a covered plan's contract with an entity (including a health insurance issuer) that subcontracts for pharmacy benefit management (PBM) services as an indirect furnishing of services by the PBM service provider (a party in interest) for purposes of applying the section 406(a)(1)(C) prohibition on furnishing goods, services, or facilities; and (2) adds definitions of health insurance issuer and health insurance coverage by cross-reference to ERISA section 733(b). This section further requires covered service providers offering PBM services to disclose, as part of the initial written description to plan fiduciaries: (1) all expected compensation (e.g., fees, rebates, spread pricing, copayment differentials) received directly or indirectly from drug manufacturers, distributors, pharmacies, or third parties; (2) amounts passed through to the plan; and (3) compensation tied to rebates, data access, or other conduit services. This section also requires such PBM providers to make annual written disclosures to responsible plan fiduciaries within 60 days after each plan year begins, covering the prior year and including: direct and indirect compensation; gross and net plan drug spending; spending at affiliated pharmacies by location; excess cost-sharing collections from pharmacies (with categorical or individual explanations); and aggregate fees by type. (As background, these changes apply to PBMs and third-party administrators for group health plans to enhance fiduciary oversight of opaque compensation practices that can increase plan drug costs.)

This section directs the Secretary of Labor to issue notice and comment rulemaking as necessary to implement the Act's provisions not later than one year after the date of enactment. The rulemaking must (1) account for the varied compensation practices of covered service providers (as defined under section 408(b)(2)(B)) and (2) establish standards for the disclosure of expected compensation by such providers.