If I don’t think about a DOL audit, it won’t happen right? WRONG!

Posted by Christy Putnam on August 28, 2017 at 2:02 PM

If someone asked, "Is your organization is ready for a Department of Labor (DOL) audit," would your response be:

  • "I'm not too concerned about it because what are the odds our company will get audited?"
  • "Yes, I am ready because we've ensured that we are compliant by preparing as thoroughly as possible for an audit."

If you answered 'B', good for you! But you are in the minority. If your answer is 'A', you may want to consider these statistics, reported for 2016 by the DOL’s Employee Benefits Security Administration (EBSA), who is responsible for the enforcement of ERISA and for ensuring the integrity of the private employee benefit plan system:

  • EBSA recovered $777.5 million for direct payment to plans, participants, and beneficiaries.
  • EBSA closed 2,002 civil investigations with 1,356 of those cases (67.7%) resulting in monetary results for plans or other corrective action; exhibiting its ability to effectively target ERISA violators in the employee benefit plan universe.
  • When workers experience a problem with an employee benefit plan, EBSA has proven effective in resolving their requests for assistance. EBSA’s benefits advisors closed more than 193,000 inquiries and recovered $394.2 million in benefits on behalf of workers and their families through informal resolution of individual complaints.

EBSA is looking at all sizes of organizations that offer health and welfare plans subject to ERISA. You may be asking what triggers an audit. Following are some of the most common factors:

Employee complaints – If any of the plan participants complain to the DOL about an ERISA violation, your plan will likely be subject to an audit.

Form 5500 issues – Failure to attach all required schedules and attachments to the return prior to filing, not answering all questions thoroughly, or inconsistent information from year to year are huge red flags that may lead to an audit.

National enforcement – Your plan may just happen to fall within one of the areas in which the DOL is focusing its investigative efforts. For example, compliance with the Affordable Care Act (ACA), employee contributions initiative, or Voluntary Fiduciary Correction Program (VFCP).

To help avoid the above triggers it is recommended that:

  • Employee questions and requests are handled in a timely manner.
  • Form 5500 is filed on time and is complete and accurate.
  • Participant notices required by law are updated and distributed by the deadlines. One of the most misunderstood document requirements is the Summary Plan Description (SPD). Most employers think this is provided by the health insurance companies, but it is not. A wrap document can help employers meet this obligation and can encompass all of the ERISA plans provided by the company in one document. This document is required to be provided to participants within 90 days of being covered by the plan. It must also be kept up-to-date with changes that are made through a Summary of Material Modification (SMM) notice, which also must be distributed in a timely manner. Not meeting these requirements could result in very large monetary penalties.

If you are feeling overwhelmed and don’t know where to start to make sure you are compliant and ready for a DOL audit, you are not alone. Human Capital Management (HCM) software can help with data tracking for required reporting. It can also assist with required distribution of employee notices through Employee Self Service (ESS) and help you be sure that you are closely following the electronic distribution requirements.

Regardless of the size of your organization, there are a lot of very reputable companies that specialize in helping businesses like yours! Reach out to human resource consultants that focus on these areas, your employee benefits broker/consultant, or an agency that helps employers review and/or create required documentation.

Topics: Human Resources, HR Policies

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