Employers always try to stay in compliance with applicable regulations, and most of us try very hard to ensure we’re doing everything right. That’s why the word “audit” can be so fear-inducing: An audit seeks to uncover any missteps—something no one wants.
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Two areas that can be audited that not everyone thinks about are health and wellness plans. These plans have provisions that are regulated under both the Affordable Care Act (ACA) and the Employee Retirement Income Security Act (ERISA)—putting these types of plans squarely in DOL’s purview. DOL’s Employee Benefits Security Administration (EBSA) handles enforcement.
DOL Health Plan Audit: What They Look For
Here are a few examples of what the DOL may be looking for if they audit an employer’s health plan:
- Proof that the summary plan description (SPD) was distributed to employees as required
- Proof that other notices were completed in a timely manner (notices are required not just for the ACA, but also for ERISA, the Consolidated Omnibus Budget Reconciliation Act (COBRA), and the Health Insurance Portability and Accountability Act (HIPAA))
- Proof that employees were informed about their plan options
- They may request copies of relevant documentation, such as:
- SPD
- Full plan details
- Information regarding the contract you have with whoever administers your plan (assuming the organization is not self-insured)
- Premium payment schedules and transaction records (including information about payroll deductions)
- Certificates of coverage
- Information about who administers the plan
- Form 5500 filings
- Confirmation that any provided plan meets all legal requirements
- Information about how claims are handled (to confirm they’re meeting claims procedural rules, and claims are being paid according to the terms of the plan itself)
These are just examples—there could, of course, be many other items the Department of Labor (DOL) may be looking at.
If there are deficiencies found during an audit, there may be fines that are levied on a per-person and/or per-day basis.
For detailed information about health plan investigations, the DOL has a website with much more: https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/enforcement/oe-manual/chapter-50.
DOL Health Plan Audit: What Might Prompt This?
Naturally, most of us want to know how to avoid an audit, so it helps to know what might trigger one. Here are a few ways it could be triggered:
- Complaints to the DOL. For example, if an employee leaves and is not given the option to continue coverage via COBRA, that may trigger a complaint—which could then trigger an investigation. (This is just one example.)
- Missing reporting deadlines. If the organization does not file required annual reports or has inconsistencies in such reporting, such as form 5500, that could trigger an audit.
- Standard enforcement. There may not be a specific prompt—the audit may come about simply as part of DOL’s normal enforcement operations. DOL enforcement typically has specific annual priorities.
- Referrals from other agencies. For example, the IRS may refer them if they’ve found anything that raises red flags.
Obviously, not all of these can be avoided, but you can prepare. Many employers prepare for the possibility of audits by conducting self-audits. By auditing your own files and procedures, you can try to uncover and remedy and deficiencies in advance. This not only will help to fix any problems but can also help you be prepared to provide the necessary information in the event of a DOL audit.