DOL Audits Are Here – Are You Prepared?
Being selected for a DOL audit can have serious consequences for an employer. According to a DOL audit report for the 2013 fiscal year, almost 3 out of 4 investigations resulted in penalties or required other corrective action.
In addition, a DOL audit may negatively affect an employer’s normal business operations because the audit process can be both stressful and time-consuming. The best time for an employer to analyze whether it is ready for a DOL audit is before the DOL comes knocking.
Technically, many of these documents and notices have been required for years.
For example, a focus of current audits is on plan documents and Summary Plan Descriptions (SPDs), which have been required under ERISA since 1974. However, until recently, there was essentially no enforcement to assure employers had these documents in place. The passage of the ACA has changed this.
Governmental agencies have focused on ACA implementation and employer compliance with the new regulatory framework, and to be consistent have announced the active enforcement of previously established regulations as well as the new regulations under the ACA.
As a practical matter, an employer has little control over whether it will be audited by the DOL. However, an employer can take the following steps to help minimize its exposure to a DOL audit:
Contact Kainos to discuss these issues and review options and customized solutions.
Have plan documents and SPDs in place for each plan you sponsor. Make timely updates to plan documents and SPDs to reflect legal and design changes. Note – insurance carrier provided Certificate of Coverage or Benefit Summaries typically do NOT fulfill the ERISA requirements of an SPD.
Distribute annual participant notices required by law (E.g., SBC, CHIP Notice, Medicare Part D Notice, WHCRA Notice, Patient Protections Disclosure, etc.).
Respond to participants’ benefit questions and requests for information on a timely basis.
File Form 5500 on time and make sure it is complete and accurate (Form 5500 is required for benefits plans with 100 or more participants at the beginning of the plan year).
Just because an employer has been selected for an audit does not mean that the employer has violated an employee benefits law. Even an employer in compliance can encounter an unexpected audit. A DOL audit is not a simple process. However, being “ahead of the game” can save an employer a large amount of money, time, and stress.