This article reflects insights shared during Nixon Peabody’s Fall 2025 benefits briefing.
Artificial intelligence (AI) is becoming a foundational tool in employee benefits management. From automating administrative workflows to enhancing participant communications, AI is reshaping how plans are operated. However, with these advancements come new responsibilities for employers and fiduciaries, particularly in areas such as oversight, transparency, and risk mitigation.
How AI is transforming employee benefits operations
Recent discussions among benefits professionals highlight how AI is being used to streamline tasks such as verifying eligibility, adjudicating claims, and reconciling payroll. Service providers are deploying systems that can detect anomalies in claims data and tailor outreach based on participant demographics and financial needs. For instance, communications can be customized for employees at different life stages—those managing student loans versus those preparing for retirement.
Fiduciary risk is the age of AI
While AI excels at handling rule-based processes, its integration into plan operations introduces complex governance challenges. Employers must remain vigilant, especially when algorithms influence decisions that affect participant outcomes. Errors, such as misclassified procedures or misallocated funds, can occur, and accountability ultimately rests with the plan fiduciary, regardless of the technology involved.
Managing vendor relationships and AI tools under ERISA standards
Effective oversight of AI tools involves understanding how systems are built and maintained. Employers should be familiar with the data sources used to train models, the methods used to validate accuracy, and the procedures for reviewing exceptions. Vendor relationships should be structured to allow for ongoing monitoring and documentation of AI-driven decisions.
The Department of Labor has previously emphasized that technological tools do not reduce fiduciary obligations. Just as ERISA retirement plan cybersecurity became a core part of governance frameworks, AI now demands similar scrutiny.
Privacy and compliance considerations for benefits plans
AI systems often rely on sensitive health and benefits data. Employers must ensure that data sharing complies with privacy regulations, including the HIPAA minimum necessary standard. When AI is used to generate insights or inform plan design, safeguards must be in place to prevent unauthorized use or disclosure.
Predictive analytics can help identify trends, such as potential compliance issues or engagement gaps, but these insights require thoughtful interpretation. Employers must avoid defaulting to automated outputs without critical review, a lesson reinforced by past litigation involving fiduciary decision-making.
Why AI-generated records pose legal risks
One emerging concern is the use of AI-generated records for plan committee meetings. Such transcripts may be discoverable in litigation and could contain inaccuracies or statements taken out of context. A more prudent approach is to rely on manually prepared minutes that reflect the committee’s deliberations with clarity and intent.
Preparing for AI integration in benefits administration
As AI continues to evolve, employers should take proactive steps to align their governance practices with the realities of digital plan administration. This includes engaging internal experts, reviewing vendor protocols, and ensuring that fiduciary standards are upheld in every aspect of AI deployment.