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Why Preparing For A DOL Audit Should Be An Employer's Top Priority

Over the past 12 years, 32 percent of health and welfare plans audited received Department of Labor (DOL) fines in excess of $10,000 due to ERISA violations made by employers both large and small.

According to an article from the DOL, in 2014, the Employee Benefits Security Administration closed 3,928 civil investigations with 64.7 percent of those cases resulting in monetary consequences for plans or other corrective action. If that doesn’t alarm you, be advised that the DOL’s 2015 budget requested an additional $10 million be earmarked for an additional 300 enforcement agents.

Don’t get caught sleeping. Employers are urged to require their insurance broker or ERISA attorney to provide the necessary tools to monitor their compliance risk. Using a compliance assessment and tracking ongoing compliance requirements is the best way to prepare for a DOL audit and protect yourself and your company from costly penalties.

Top Triggers of a DOL Audit:

  1. A participant complains to the DOL about potential ERISA violations
  2. Incomplete, inconsistent or missing Form 5500(s)

Penalties for Non-Compliance:

  • For violations of notice and reporting failures, the fine is $110 per day per participant
  • For violations of failure to file Form 5500, the fine is up to $1,100 per day
  • Criminal penalties can be assessed if any of the following is found:
  1. Evidence of willful misconduct of reporting and disclosure rules
  2. Coercive interference
  3. False statement or concealment of facts
  4. Theft and/or embezzlement from employee benefit plans

Minimize your risk of being audited, by following these simple tips:

  • Conduct a full compliance assessment and audit to determine any deficiencies
  • Review health and welfare plans to ensure all required documents are available

[Employers should be able to easily locate a copy of the SPD, SBC, HIPAA, COBRA, FMLA and GINA notices]

  • File Form(s) 5500 accurately and timely, with plan numbers referenced according to the SPD(s)
  • Respond to participants’ benefit questions and requests for information in a timely manner
  • Select one person to be the point person for benefit plan compliance
  • Train staff on compliance obligations and implement internal procedures to address violations promptly
  • Implement a technology-based compliance tool that will provide an automatic email reminder and checklist to keep your organization up to date

With the DOL‘s increased activity, an audit of your health and welfare plan is needed now more than ever. Review your plan documents and ensure that you have been properly providing required notices and keeping track of your plan’s compliance with ERISA, COBRA, HIPAA and other relevant requirements. It is in your company’s best interest to inquire with your insurance broker and ERISA attorney for additional tools to better monitor your compliance obligations.


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