Hidden Fee Disclosure Act Mandates PBMs and TPAs Detail All Compensation, Targeting Retirement and Health Plan Costs

This bill, officially the Hidden Fee Disclosure Act of 2025, takes direct aim at opaque pricing structures in the employee benefits world. Simply put, it forces the companies that manage your retirement funds and your health insurance drug benefits to show their work—and their profits. It does this by tightening disclosure rules under the Employee Retirement Income Security Act of 1974 (ERISA), ensuring that the financial managers (fiduciaries) of your workplace plans get the full picture of who is getting paid what, and why.

Retirement Plans: No More Aggregate Fees

If you have a 401(k) or another workplace retirement plan, this bill has a provision for you in Section 2. Currently, the service providers helping manage those plans—the recordkeepers, consultants, and so on—have to disclose their fees. However, they can sometimes lump those fees together, making it hard to tell exactly what you’re paying for. This bill changes that. It mandates that covered service providers must break down their costs by service—not just in one big, aggregated total. If a provider handles both recordkeeping and consulting, they can’t just give you a single bill; they have to itemize it. Furthermore, it clarifies that a long list of specific consulting services—from plan design to wellness programs—all fall under these strict disclosure rules, closing loopholes where vague 'consulting' fees might have been hidden.

Health Plans: Shining a Light on PBM Profits

Section 3 is where the bill really flexes its muscle, focusing on group health plans and the companies that manage them: Pharmacy Benefit Managers (PBMs) and Third-Party Administrators (TPAs). For years, PBMs have been criticized for operating in the shadows, making money through rebates and price differences that plans (and members) often don't see. This bill treats the relationship between a plan and a PBM as an ‘indirect’ arrangement, immediately subjecting it to stricter ERISA conflict-of-interest rules.

Under the new rules, PBMs must provide the plan fiduciary with a massive amount of detail, both upfront and annually. Upfront, they must detail all expected compensation—including fees, rebates, discounts, and price concessions—they expect to receive from drug manufacturers, distributors, or anyone else. They also have to disclose how much of that money they plan to keep versus how much they will pass back to the plan. Annually, PBMs must report the plan’s total gross spending versus net spending, detail how much they make from charging members higher co-pays than the drug actually cost them, and even break down spending at pharmacies they own, like mail-order facilities. This level of detail is designed to give plan sponsors the ammunition they need to negotiate better deals and spot any self-dealing.

TPAs Face Similar Scrutiny

Third-Party Administrators (TPAs), who handle administrative tasks for health plans, also face new transparency rules. Like PBMs, TPAs must disclose upfront how much they expect to retain from rebates, discounts, or recoveries from overpayments. Annually, they must report total gross and net spending, aggregate fees collected, and all direct and indirect compensation they or their affiliates received. This ensures that when a TPA claims to be saving the plan money, the plan fiduciary can verify exactly how much of that savings the TPA is keeping for itself. For the average employee, this transparency means that the plan sponsors managing your benefits will finally have the data necessary to cut out hidden costs, which could eventually translate into lower premiums or better benefits.

What Happens Next

This isn't an instant fix. Section 4 requires the Secretary of Labor to establish the final rules and standards for disclosure within one year. Crucially, these new requirements only apply to contracts signed, extended, or renewed on or after January 1, 2026. This gives the industry time to adjust, but it puts PBMs and TPAs on notice: the era of keeping your compensation structure a secret is coming to an end. For busy people juggling rising costs, this bill is a big win for accountability, ensuring that the people managing your retirement and health funds are fully transparent about the price tag.