Fiduciaries need to stay updated on new AI regulations and their implications for employee benefit plans due to recent state and federal initiatives focusing on AI. With laws now being put in place that impact HR and healthcare, the potential for claims stemming from AI use in benefit administration has risen significantly. Careful assessment and proactive measures are essential to mitigate risks and ensure compliance with nondiscrimination standards.
Fiduciaries must stay informed about the evolving landscape of artificial intelligence (AI) regulations. Recent state laws and federal initiatives signal increased scrutiny and regulation of AI, particularly regarding its use in human resources and employee benefit plans. As AI technologies advance, fiduciaries covering health and welfare benefits need to be proactive to effectively navigate potential liabilities and compliance requirements.
In the realm of state law, several jurisdictions have enacted significant regulations. California has introduced over ten AI-related laws in 2024, focusing on areas like patient communication and AI-driven medical decisions. Illinois has implemented regulations aimed at preventing discrimination in employment practices involving AI, while Colorado’s 2026 AI Act emphasizes care in AI applications. These laws indicate a broader effort among states to regulate HR practices, suggesting that fiduciaries must carefully consider how they integrate AI tools into their operations.
The federal government is also making strides towards AI regulation. HHS released guidance emphasizing nondiscrimination in AI applications within healthcare. Additionally, the Treasury’s request for information regarding AI in financial services illustrates a burgeoning federal interest aimed at protecting consumers and ensuring fairness across sectors, including employee benefits. Fiduciaries should pay attention to these developments to protect against potential claims.
Moreover, with AI’s increasing sophistication, there are rising concerns about its implications for ERISA claims. Platforms like Darrow AI claim to analyze extensive data to pinpoint discrepancies in plan operations, potentially revealing fiduciary breaches. This emerging technology poses risks for fiduciaries, who must anticipate AI’s role in litigation against them regarding benefits inequities, particularly in health programs.
To adapt, fiduciaries are advised to evaluate their use of AI, ensuring compliance with nondiscrimination standards and assessing the necessity for bias mitigation. Comprehensive audits of service providers’ AI systems should be conducted to ensure adherence to regulatory guidelines. Policies also need to be revised to account for AI usage, enhancing risk management strategies while integrating compliance with legal mandates.
Fiduciaries should enhance awareness and training for their teams concerning AI’s risks and benefits, document their due diligence in implementing AI usage, and ensure clarity about their obligations under Section 1557. As AI continues to evolve, maintaining a robust framework for compliance could ultimately safeguard the integrity of retirement and welfare benefit plans, allowing fiduciaries to leverage AI’s advantages while mitigating potential pitfalls.
The article discusses the importance for fiduciaries to keep abreast of new artificial intelligence regulations that could impact employee benefit plans. It emphasizes how recent state laws and federal guidance on non-discrimination are reshaping how AI is allowed to be implemented in various systems, particularly in HR and healthcare sectors. The rise of AI capabilities also signifies that fiduciaries face new challenges that require proactive management strategies to safeguard against legal liabilities.
In summary, fiduciaries must actively monitor AI developments and regulatory changes to mitigate risks associated with its use in employee benefits plans. By conducting thorough evaluations, audits, and trainings, fiduciaries can ensure compliance with current laws while capitalizing on the benefits AI technologies offer. Taking a proactive stance will ultimately help protect the interests of plan participants amid an increasingly complex regulatory landscape.
Original Source: www.foley.com
