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Fidelity Bonds

Guest deacon

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We are a small TPA. Some plans we administer make deposits for claims and expenses directly to a common account that we disburse claims reimbursements from and others have their own account which claims are paid out of. We have a fidelity bond in our name. Does each plan need to be purchasing a bond in the name of their plan? These plans involve only medical and FSA's, no retirement plans.

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  • 2 weeks later...
Guest LLandau

It is my understanding that, if a plan fiduciary (even a fiduciary for a welfare plan) handles contributions/premiums paid by participants, the plan is required to obtain a fidelity bond to protect the participants.

Therefore, if the clients handle participant contributions in any way, or if there is a trust in which participant contributions have been placed, the clients are to obtain fidelity bonds.

Besides, better safe than sorry.... fidelity bonds are rather inexpensive and easy to obtain. Why would clients hesitate when during an audit, they could be found remiss in their fiduciary obligations.

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