Labor Department finalizes PBM fee-disclosure rule for large self-insured ERISA health plans
Published November 8, 2026 · Coverage November 1–7, 2026, Pacific · Medium priority
The Labor Department's Employee Benefits Security Administration (EBSA) published a final rule (Regulation Identifier Number (RIN) 1210-AB37, 29 CFR part 2550) requiring providers of pharmacy benefit management services, and affiliated brokerage and consulting providers, to disclose compensation to fiduciaries of large self-insured Employee Retirement Income Security Act (ERISA) group health plans as a condition of the ERISA section 408(b)(2) prohibited transaction exemption. The rule is effective January 4, 2027, and applies to plan years beginning on or after July 1, 2027. Initial disclosures are due in writing reasonably in advance of the date the contract or arrangement is entered into, extended or renewed; for an extension or renewal, the rule text deems 90 calendar days in advance a reasonable period, and the preamble describes that as applying absent an agreement between the provider and the plan to a longer timeframe, followed by semiannual disclosures or quarterly at the plan's request. Under the administrative exemption, if a service provider does not comply with a written request within 90 calendar days, the responsible plan fiduciary must decide whether to terminate or continue the arrangement and document the basis.
Background
ERISA section 408(b)(2) is a statutory exemption from ERISA's prohibited transaction rules for contracts or arrangements for services. The Labor Department proposed this rule, titled Improving Transparency Into Pharmacy Benefit Manager Fee Disclosure, on January 30, 2026, and on February 3, 2026 Congress made further changes to ERISA in the Consolidated Appropriations Act, 2026.
Who this affects
Hospitals and health systems as sponsors and fiduciaries of self-insured ERISA group health plans that are offered by a specified large employer or are specified large plans, as the rule defines those terms (a specified large plan is one established or maintained by a plan sponsor described in ERISA section 3(16)(B)(ii) or (iii) that averaged at least 100 participants on business days in the preceding plan year); their pharmacy benefit managers (PBMs) and affiliated brokers and consultants. Fully insured plans are excluded from the regulatory definition, as are plans established by a sponsor that is, or is affiliated with, a drug manufacturer, distributor, wholesaler, pharmacy benefit manager or rebate aggregator. A PBM or affiliate is a covered service provider only if it reasonably expects $1,000 or more in direct or indirect compensation for the services.
Why it matters
Inference: a health system that sponsors a covered self-insured plan should expect new PBM disclosure packages for plan years beginning on or after July 1, 2027, and needs a fiduciary process to review them, request missing information and document decisions. Inference: Title I of ERISA does not apply to governmental plans, so applicability to public systems needs legal review; the rule text does not address church plans, so faith-based systems should also confirm with counsel. PBM renewals scheduled in 2027 may fall inside the 90-day advance window.
Required actions
- For covered plans, on and after plan years beginning on or after July 1, 2027: if a covered service provider refuses to correct a failure identified in a written request, or 90 calendar days pass after the request without compliance, the responsible plan fiduciary notifies the Secretary of the failure (notice filed with the Department not later than 30 calendar days after the earlier of the refusal or the 90th day, so a refusal starts the 30 days at once, paragraphs (n)(1)(iii) and (n)(3)); where the provider has not complied within 90 calendar days of the request, the fiduciary also determines whether to terminate or continue the arrangement and documents the basis (paragraph (n)(5), which names only that 90-day failure as its trigger); these are conditions of the administrative exemption.
Recommended action
- Benefits and Legal: confirm whether each employee health plan is a covered plan (a self-insured ERISA group health plan that is either offered by a specified large employer, meaning one that averaged at least 100 employees on business days in the preceding calendar year and employs at least one employee on the first day of the calendar year, or is a specified large plan, meaning one established or maintained by a plan sponsor described in ERISA section 3(16)(B)(ii) or (iii) that averaged at least 100 participants on business days in the preceding plan year; plans of sponsors in or affiliated with the drug supply chain, including PBMs, are excluded, and the counting and aggregation rules are in paragraphs (m)(6) and (m)(7) of the rule).
- Inventory PBM, broker and consultant contracts with renewal dates on or after April 2027 and build the disclosure request and review into renewal timelines.
- Assign a fiduciary reviewer and a documentation template before July 1, 2027.
Scope and timing
- Authority status
- Final
- Responsible owner
- HR / Benefits, with Legal
- Publication date
- 2026-11-02
- Effective date
- 2027-01-04
- Implementation date
- Applicable to plan years beginning on or after 2027-07-01
Not established
Not reviewed for this entry: the full list of disclosure data elements and the temporary enforcement policy text. govinfo PDF not retrieved.
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