For years, voluntary benefits lived in a comfortable gray area.
Employees paid the premiums. Employers offered access. Direct-to-market carrier reps, enrollment firms, and/or brokers facilitated enrollment. And the prevailing belief was simple – if it is voluntary, the risk is minimal.
That belief is now being tested.
Before going further, a quick note on terminology. Anyone who knows me, know that I have long believed the phrase "voluntary benefits" is outdated and largely meaningless. All benefits are voluntary. Participation is voluntary. Reading this article is voluntary (and I thank you for it). For that reason, I prefer the term "Enhanced Benefits" to describe these offerings. The industry and regulators still widely use "voluntary," so I will acknowledge that label for clarity. Moving forward throughout this piece, I will refer to these plans as Enhanced Benefits, otherwise known more broadly as voluntary benefits.
The recent wave of ERISA lawsuits targeting accident, critical illness, cancer, and hospital indemnity plans, a specific subset of Enhanced Benefits that are not always, but typically 100% employee-funded, is not about eliminating choice or punishing innovation. It is about governance. More specifically, it is about whether employers and their advisors can demonstrate a prudent, documented process behind how these Enhanced Benefits are selected, priced, monitored, and delivered.
This is not a fringe issue. It is a structural one.
The real issue is not choice. It is process.
The lawsuits making headlines are not arguing that Enhanced Benefits are inherently flawed. They allege that fiduciaries failed to monitor carrier selection, negotiate premiums, evaluate loss ratios, review broker compensation, and document decision-making. In other words, the alleged failure is not what was offered. It is how it was managed.
ERISA has always been process driven. Fiduciaries are judged not just on outcomes, but on whether they acted with care, prudence, and diligence, and whether they can prove it.
Saying "employees chose it" is no longer enough.
Voluntary does not mean hands-off
One of the most dangerous assumptions in benefits is that "voluntary" equals exempt from responsibility. In reality, whether an Enhanced Benefit falls under ERISA depends on how it is structured, communicated, and administered.
Employers who unintentionally endorse programs, rely heavily on external enrollment partners without oversight, or fail to evaluate compensation and pricing can find themselves subject to fiduciary standards whether they planned to be or not.
That means the question is no longer "Is this benefit voluntary?" The real question is "What process supports this benefit, and can we document it?"
Compensation is about alignment, not accusation
Much of the litigation discussion focuses on commissions, and understandably so. But this is not about vilifying compensation. It is about alignment.
Historically, upfront, advanced, and heaped compensation models were used to subsidize enrollment-heavy delivery systems, largely created by the biggest carriers. Revenue was tied to transactions, not long-term outcomes. Over time, that created risk, especially when compensation was not transparently disclosed, benchmarked, or monitored.
My firm moved away from upfront, advanced, and heaped compensation more than a decade ago. We operate on levelized compensation because it aligns with how fiduciary responsibility actually works. When revenue is not dependent on enrollment spikes or carrier rotation, the focus naturally shifts to governance, documentation, and decision quality.
That is not ideology. It is risk management.
Self-serve enrollment is not the enemy
There is a growing misconception that avoiding fiduciary risk requires high-touch, adviser-led enrollment for every employee. Our data does not support that.
Over the last five years, we have consistently offered on-demand, 1-on-1 virtual enrollment assistance. The reality is that most employees do not opt for it. They prefer to educate themselves on their own time using digital tools. That mirrors how people make decisions everywhere else in their lives.
People spend more time researching a new phone than their benefits. I may not like that but ignoring it does not make it untrue.
Self-serve enrollment is a delivery method. It is not a fiduciary strategy.
Fiduciary responsibility exists upstream, regardless of how enrollment occurs. Carrier selection, premium reasonableness, compensation review, benchmarking, and monitoring still matter. Self-direction without support is risky. Self-direction with structured decision support and documented governance is defensible.
Decision support is where the industry must evolve
If there is one clear takeaway from the current litigation, it is this: passive exposure is no longer sufficient.
Better outcomes do not require fewer choices. They require better support.
That includes:
- clear education that helps employees understand risk and tradeoffs
- technology that structures decisions instead of overwhelming users
- AI-driven tools that surface relevance and gaps
- documentation of how decisions were supported, not just what was selected
When done correctly, enrollment becomes the outcome of understanding, not the objective itself.
What these lawsuits are really signaling
The courts are not attacking Enhanced Benefits. They are challenging the idea that silence is neutral, and that optionality alone is protection.
Employers cannot outsource fiduciary responsibility. Advisors cannot operate without demonstrable process. Compensation must be reasonable and monitored. Decisions must be documented.
This is not about reducing access. It is about proving care.
A more durable path forward
The future of Enhanced Benefits is not high touch versus hands-off. It is intentionally supported.
It is a model where fiduciary process is documented, compensation is levelized and aligned, decision support is embedded, and enrollment reflects understanding rather than exposure.
That shift does not weaken the system. It strengthens it.
Employees gain confidence. Employers gain defensibility. Advisors gain relevance. Carriers gain stability.
This moment is not a threat to the industry. It is an opportunity to mature.
And the organizations that embrace that reality now will be the ones still standing when the scrutiny fades, and the standards remain.
What do you think? Do you agree? Disagree? I welcome your opinion – send me a message on LinkedIn or contact me directly through my website. Also, if you've seen value in this and you feel so inclined, I wouldn't object to you sharing this article on LinkedIn and any of your other favorite social media channels – please don't forget to tag me.
Until next time, don't just have a great month – make it a great month!
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.