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DOL plan audits set to increase

Published on January 27th, 2017 by Triton Benefits & HR Solutions

Since the Affordable Care Act was enacted in 2010, healthcare has been at the forefront of the majority of discussions taking place in the government as well as among employers. As the years have passed, various reforms and regulation changes have occurred. Companies have attempted to keep up with these rules, but compliance can be a difficult task to stay on top of.

As a result, the U.S. Department of Labor has decided to increase the number of  audits they perform in order to pinpoint plan sponsors and fiduciaries that aren't adhering to federal standards.

Under ERISA, the DOL has the authority to audit employers who may be violating federal healthcare regulations.Under ERISA, the DOL has the authority to audit employers who may be violating federal healthcare regulations.

The ERISA effect
While the rise in examinations of business records may come as a surprise to a number of parties, it is perfectly legal. Under the Employee Retirement Income Security Act, the DOL has the authority to request submissions of certain data as well as perform investigations on-site if the organization believes violations are taking place.

So what alerts the DOL to potential noncompliance issues? The American Bar Association lists the following as reasons why the Employee Benefits Security Administration (EBSA) targets certain businesses :

  • Participant complaints.
  • Reports filed under ERISA: Form 5500, an annual report which details a plan's status of activity.
  • Government agencies: The IRS and state insurance regulators.
  • Nongovernmental sources: Newspapers and trade journals.

In most cases, employers will be unaware of what caused the investigation into its health plan. No matter the reason, these companies must prepare for a comprehensive examination.

Necessary paperwork
If the DOL decides to conduct an audit on an employer, the organization will request certain documentation prior to the investigation. The key for businesses is to use these submissions to demonstrate compliance with existing government regulations.

According to HR Daily Advisor, the following ten types of paperwork will likely be solicited:

  1. Signed plan documents.
  2. Summary plan descriptions.
  3. Recent, signed Forms 5500. 
  4. Meeting minutes.
  5. Financial records, service provider and insurer contracts and employees' enrollment applications.
  6. Documentation of compliance via notice requirements, such as the Health Insurance Portability and Accountability Act (HIPAA) and related laws.
  7. Paperwork demonstrating adherence to ACA provisions and claims procedures as well as market reforms.
  8. Records of grandfather status under the ACA.
  9. Claims data and reports, especially for the past six months.
  10. Electronic versions of the above-listed documentation.

The audit process
In addition to the required paperwork, the DOL will make an appearance on the employer's premises to interview workers about their plan experience. Typically, the organization auditors will remain on location for two to three days.

The agency will send a closing letter if it finds no violations or once those they've discovered have been rectified, HR Daily Advisor continued. If problems are found, the DOL can then take more serious action, such as leveraging penalties or calling for prosecution.

Receiving a voluntary compliance letter is also a common occurrence for employers. The document details the DOL's discoveries and gives a breakdown for corrective steps.

If companies are prepared for both the documentation process and audit procedure, potential investigations can become less overwhelming.

"Employers should contact their healthcare plan broker if they are being audited."

Next steps for employers
Compliance is a never-ending task. There will always be new regulations and reform employers must remain on top of. With a new president in the White House, awareness of changing rules has become increasingly important for businesses.

As organizations prepare for the DOL's audit requirements, there are many actions leaders should take. First and foremost, executives should utilize the federal agency's two-part self-compliance tool, which helps employers understand whether their plan options are meeting government standards.

Next, and perhaps most important for companies, is to contact their group health broker or an attorney. These organizations can assist businesses in developing and collecting the appropriate paperwork, as well as prepare employees for the DOL's audit interview process. As a result, businesses can reduce the amount of anxiety that comes with the investigative procedure and ensure all their ducks are in a row.

Triton Benefits & HR Solutions offers employers the compliance assistance they need to avoid expensive and potentially detrimental penalties. Triton ensures companies adhere to ever-changing federal regulations while providing comprehensive and cost-effective benefit plan options. When working with Triton, employers will be prepared and in compliance for any potential audit.   

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