OPS-SOP-020 — Fiduciary Fee Review Process (Annual)
1. Purpose & Scope
This SOP defines the annual fiduciary fee review process required under ERISA Section 408(b)(2). All service providers receiving compensation from the Unity Care Member Plan must be reviewed annually to confirm: (1) fees are reasonable, (2) services are necessary, and (3) providers qualify as ERISA-compliant service providers.
This review is conducted by an independent ERISA fiduciary reviewer (Bill Kropkoff, ERISA Group, former DOL) and coordinated by the Operations Director. The review covers all vendors, advisors, and service providers receiving direct or indirect compensation from any participating employer plan under the trust.
Critical — ERISA Prohibited Transaction Risk: Failure to review and document service provider fees is a prohibited transaction under ERISA Section 406. The DOL can assess penalties of 15–100% of the transaction amount. This review is non-negotiable, not optional.
2. Roles & Responsibilities
| Role | Responsibility |
|---|
| Operations Director | Initiates annual review; assembles fee documentation from all vendors; coordinates with Kropkoff; tracks to completion |
Independent Fiduciary Reviewer
(Bill Kropkoff, ERISA Group) | Conducts independent fee reasonableness analysis; issues written opinion; flags prohibited transaction risk |
| ERISA Legal Counsel (Eric Gregory) | Reviews Kropkoff's findings; advises on any corrective action required; confirms no ERISA violations |
| Primary Approver (Dr. Greg) | Reviews and approves fee review summary; authorizes any vendor contract changes resulting from review |
| Finance | Provides actual fees paid per vendor from GL for the review period |
| Each Service Provider | Must provide ERISA 408(b)(2) disclosure of all direct and indirect compensation; failure to disclose is itself a prohibited transaction |
3. Covered Service Providers
The following vendors must be included in each annual fee review. Each must have a current 408(b)(2) disclosure on file before the review begins.
| Vendor | Service Type | ERISA Category | 408(b)(2) Disclosure on File? |
|---|
| Allied Benefit Systems | TPA — claims processing, eligibility, escrow | Covered Service Provider | Confirm |
| ProAct (via Leaf Health) | PBM — pharmacy benefit management | Covered Service Provider | Confirm |
| SRS (Strategic Risk Solutions) | Program Management / Broker ($30 PEPM) | Covered Service Provider | Confirm |
| Spartan Wealth / Kaylin Konja | General Broker ($30 PEPM) | Covered Service Provider | Confirm |
| Varipro | COBRA Administration | Covered Service Provider | Confirm |
| Health Equity | FSA/HSA Administration | Covered Service Provider | Confirm |
| Davies Group | Actuarial Services | Covered Service Provider | Confirm |
| Dickinson Wright PLLC | ERISA Legal Counsel + Captive Counsel | Covered Service Provider | Confirm |
| Unity Care Solutions, LLC | Program Manager ($30 PEPM included) | Party in Interest — heightened review | Confirm |
CAA Requirement: In addition to ERISA 408(b)(2), the Consolidated Appropriations Act (CAA) requires each employer plan to annually disclose all broker and consultant compensation. This is an employer-level obligation. Operations coordinates disclosure; each employer plan sponsor signs off. Deadline: included in annual compliance calendar (OPS-SOP-021).
4. Annual Fee Review Process — Step by Step
Step 1 — Initiate (90 days before plan anniversary)
Assemble Fee Documentation
Owner: Operations Director + Finance
- Pull actual fees paid per vendor from GL for the prior 12-month plan year
- Request updated 408(b)(2) disclosure from each covered service provider (written request, retain response)
- Compile: vendor name, service description, fee type (PEPM, hourly, flat, AUM %), total annual fees, indirect compensation (override commissions, bonuses, etc.)
- Flag any vendor that fails to provide 408(b)(2) disclosure within 30 days — escalate to ERISA Legal Counsel immediately (non-disclosure is itself a prohibited transaction)
Step 2 — Submit to Independent Reviewer (60 days before anniversary)
Kropkoff Fee Reasonableness Analysis
Owner: Operations Director → Bill Kropkoff (ERISA Group)
- Send fee package to Bill Kropkoff: all 408(b)(2) disclosures, actual fees paid, service descriptions, plan size (lives, claims volume)
- Kropkoff benchmarks fees against market comparables for each service category
- Kropkoff issues written fee reasonableness opinion covering each vendor
- Any vendor flagged as potentially unreasonable: Operations notifies vendor and requests justification or renegotiation
Why this matters: Eric Gregory introduced Kropkoff specifically for this purpose — as a former DOL employee, his written opinion provides the strongest possible defense against a prohibited transaction audit. Keep every Kropkoff opinion on file for at least 7 years.
Step 3 — Legal Review (30 days before anniversary)
ERISA Counsel Reviews Findings
Owner: ERISA Legal Counsel (Eric Gregory)
- Eric reviews Kropkoff's opinion and fee package
- Confirms no prohibited transactions; advises on any corrective action
- If a vendor fee is found unreasonable and vendor will not renegotiate: Eric advises on ERISA correction process (VFCP — Voluntary Fiduciary Correction Program)
Step 4 — Primary Approver Sign-Off
Leadership Approval & Contract Action
Owner: Primary Approver (Dr. Greg)
- Operations presents fee review summary to Primary Approver: all vendors, fees, Kropkoff conclusion, any action items
- Primary Approver approves or requests changes
- Any contract renegotiations, vendor changes, or terminations authorized in writing
Step 5 — Document & File
Retain Evidence of Review
Owner: Operations Director
- File complete fee review package: 408(b)(2) disclosures, Kropkoff opinion, Eric's legal review, Primary Approver sign-off
- Retain for minimum 7 years (ERISA records retention)
- Store in PHI-secure records location [TBD]
- Update changelog for this SOP with review completion date and findings summary
- Schedule next annual review 12 months out
5. CAA Broker Compensation Disclosure (Annual — Per Employer Plan)
Separate from the ERISA fee review, the CAA requires each employer plan to disclose all broker and consultant compensation to plan participants annually. This is an employer-level obligation — Unity coordinates on behalf of participating employers.
| Item | Detail |
|---|
| Brokers covered | Spartan Wealth (Kaylin Konja) — $30 PEPM direct commission. Any indirect compensation must also be disclosed. |
| Consultants covered | SRS (Melissa Hancock) — $30 PEPM program management fee. |
| Disclosure method | Each employer plan sponsor provides written disclosure to plan participants. Operations drafts; employer signs and distributes. |
| Deadline | Annual — included in OPS-SOP-021 Compliance Calendar |
| Failure penalty | $1,000/day per employer plan (CAA Section 202) |
6. Open TBDs
- [TBD] 408(b)(2) disclosure status — confirm on file for all 9 vendors listed above
- [TBD] PHI-secure records storage location for fee review files
- [TBD] Kropkoff engagement terms and fee — confirm with Eric Gregory
- [TBD] Annual review trigger date — set to 90 days before each plan anniversary (Jan 1 plans = October 1 initiation)
- [TBD] Unity Care Solutions, LLC 408(b)(2) disclosure — as Program Manager receiving $30 PEPM, Unity must disclose its own compensation to each employer plan
OPS-SOP-020 v1.0 | Unity Care Solutions, LLC — Internal / Confidential
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