The Department of Labor will be ramping up its incidents of audits to ensure full compliance with the Affordable Care Act (ACA) and Employee Retirement Income Security Act (ERISA) laws. Thousands of new auditors have been hired and will be aggressively pursuing this compliance, and many employers out there could be caught off guard if they don’t get organized and prepared. Here’s a look at how these audits can affect your business, and why you should not assume that you’re safe.
Many employers think that so long as they treat their employees well, they are safe from an audit. While it’s true that most audits are triggered by employee complaints, there are also random audits that occur. In addition, forgetting or failing to file the right paperwork can trigger an audit.
Even more, can you guarantee that not a single employee in your company is disgruntled? All it takes is one complaint at the right time to trigger an audit. It’s far better to be prepared to have one, than it is to assume you will not. Recent statistics show that well over 35 percent of audits result in fines over $10,000. In fact, a full five percent of fines are in excess of $50,000.
Mistakes and Errors
Few believe that employers are deliberately misleading or misrepresenting themselves so far as compliance goes, but the new laws can be confusing, and there are major opportunities for mistakes and errors to crop up. The DOL conducts over 3,000 audits annually, and 70 percent of these include some sort of error or failure.
What Auditors Want
If you get called upon by an audit, there are very specific forms and documents that the auditor will want to see. Be sure that you have ready a formal plan document and summary plan description as required by ERISA regulations. Include a list of all plan service providers, your Form 5500, all compliance documents for both HIPAA and COBRA, as well as documentation of Women’s Health and Cancer Rights Act and CHIP compliance.
You must also provide an ACA-required Summary of Benefits and Coverage and an Exchange/SHOP notice. There are many other documents that may be required, and it is important that your HR department is on top of everything needed.
Any and all records of ERISA/ACA compliance must be kept in good organization and order so that they can be pulled at a moment’s notice in case of an audit. Be sure that your people know your plan backwards and forwards, that operations are in full compliance with documentation, and that you are meeting all laws and regulations, including any amendments.
Ensure that your contribution deposits are on time. Be certain that all of your eligible employees are educated and aware of their eligibility. Stay on top of matching funds, and document hardship distributions carefully.
If the new ERISA/ACA laws seem arcane and difficult to you, hiring an expert HR outsourcing firm may be an optimal solution. Take some time to check out the services we have to offer, and then drop us a line with any questions you might have.