The voluntary benefits landscape ended 2025 with a significant development: four lawsuits filed in December 2025 against large employers and their voluntary benefit programs. While litigation in employee benefits is not new, this coordinated set of cases has drawn considerable attention — and for good reason.

They closely mirror the opening moves of the retirement plan litigation wave from the early 2000s, which ultimately transformed fiduciary expectations, fee transparency, and governance standards across the retirement industry. The same pattern now appears to be taking shape in voluntary benefits.

For employers and brokers, this moment represents an inflection point that warrants awareness, preparation, and proactive strategy. Watch the Holmes Murphy Mini webinar hosted by myself and Avant Sr. Risk Consultant Lance Lankford covering this topic or keep reading for our analysis.

Why These Lawsuits Are Turning Heads

The same legal playbook that reshaped 401(k)s is being applied to voluntary benefits.

The law firm behind these cases previously led large-scale litigation that resulted in massive settlements, new fiduciary standards, and a complete rethinking of fee structures in retirement plans. Their reentry into the benefits arena — this time focused on voluntary products — signals a serious strategic shift.

Voluntary benefits are being challenged as ERISA-covered plans.

Historically, voluntary benefits (VBs) were often considered outside of the Employee Retirement Income Security Act (ERISA) due to employer non-involvement. The lawsuits argue the opposite: that employers effectively “endorse” these plans, making them ERISA-governed and subject to fiduciary oversight.

Brokers and consultants are included as co‑fiduciaries.

This is a notable expansion of perceived responsibility and could have far‑reaching implications across the Employee Benefits community.

The Perfect Storm Behind the Scrutiny

Several regulatory and market changes have come together to create this moment.

Increased transparency under the Consolidated Appropriations Act (CAA)

The CAA requires compensation disclosures for any broker or consultant receiving more than $1,000. These detailed filings have made it easier for attorneys to identify:

• Commission structures
• Compensation discrepancies
• Potential conflicts of interest

This visibility is a foundational component of the lawsuits.

Access to more granular loss ratio data

New transparency rules are enabling deeper analysis of how premium dollars are used. In many of the cases referenced:

• Commissions total 30–40% of premium.
• Claims paid are only 25–35%.

In some instances, employees are paying more toward commissions than toward actual benefits, making pricing and value central issues.

A Supreme Court ruling that lowers the threshold for litigation

A recent ruling determined that plaintiffs only need to allege a plausible fiduciary breach to move beyond summary judgment. Defendants must then prove exemptions, including ERISA safe harbor, apply.

This dramatically increases the likelihood that cases will reach discovery, a costly stage where many organizations prefer to settle.

A Familiar Pattern: Lessons From Retirement Plan Litigation

The structure of these new lawsuits strongly resembles the early wave of 401(k) litigation:

• Start with large, well‑known employers. These cases set precedent, generate headlines, and yield high-dollar settlements.
• Establish legal footholds. Once early cases succeed, attorneys expand to mid-sized and small employers.
• Shift industry norms. What began as “best practice” for retirement plans eventually became expected governance including fee benchmarking, transparency, and ongoing fiduciary review.

What This Means for Employers

Specialty benefits like VBs themselves are not the problem. In fact, in an era of rising medical costs and high-deductible health plans, VB products such as hospital indemnity, accident, and critical illness coverage are more relevant than ever.

The concern lies in:

• How plans are structured.
• How compensation is designed.
• How oversight is documented.

Programs built without governance or transparency are now at higher risk.

Industry Best Practices to Reduce Exposure

Forward‑leaning brokerages have adopted several safeguards designed to protect employers and employees while maintaining the value of voluntary benefits.

Level commissions instead of “heaped” commissions

Heaped commissions create disproportionate year‑one payouts and incentives for churn. Level commissions promote stability, fairness, and long-term value.

Avoiding commission‑driven enrollment models

This prevents high‑pressure tactics, ensures employees make informed decisions, and reduces the risk of manipulative or fear-based sales practices.

Using broad carrier panels without pay‑to‑play arrangements

Carrier selection should be based on financial strength, product quality, and claims performance, not side agreements or revenue sharing.

Transparent tracking of funds

Any dollars used for technology, administration, or support services should be clearly documented at the client level.

Annual market checks and product reviews

Regular evaluation ensures benefit designs, pricing, loss ratios, and contract terms remain competitive and appropriate.

What Employers Should Start Doing in 2026

Here’s a concise action plan to guide employer decision‑making.

Evaluate whether voluntary benefits could fall under ERISA

Even if safe harbor is the goal, it may not be achievable. Knowing your exposure is step one.

Review the financials

Ask:

• How much of premium goes to commissions?
• Are claims ratios aligned with market standards?
• Does the value proposition make sense?

Confirm compensation disclosures are complete and current

Compliance is essential, but transparency is equally important for risk mitigation.

Review carrier selection practices

Document:

• Why carriers were chosen.
• How products compare.
• Why designs support employee needs.

Strengthen your benefits governance process

Whether you have a formal committee or a small internal team, documentation matters:

• Meeting notes
• Rationale for decisions
• Carrier/product comparisons

If you don’t have a benefits committee or group evaluating potential products and partners, consider creating one to enhance your due diligence.

The Bottom Line

The voluntary benefits market is not in crisis, but it is entering a new era of accountability. Attorneys are using a proven roadmap from retirement plan litigation and applying it directly to employee benefits. Employers who proactively strengthen their oversight, transparency, and governance will be well‑positioned to navigate this shift.

Voluntary benefits will remain a strategic part of the benefits portfolio. The opportunity now is to ensure that plans are designed, priced, and administered with integrity — and that employees receive real value from the protection they’re purchasing. Our team is here to help you evaluate your programs, strengthen your governance, and ensure your voluntary benefits strategy supports both compliance and employee well‑being. Contact us today to get started.