How To Survive a DOL Audit Welfare Benefit Plans. Presented by: Holly M. Wahl MHP, HIA VP, Compliance & Communications Leader.

Transcription

1 How To Survive a DOL Audit Welfare Benefit Plans Employee Benefits Presented by: Holly M. Wahl MHP, HIA VP, Compliance & Communications Leader Thursday, September 18, 2014

2 AGENDA Employee Benefits What is a Welfare Benefit Plan? Who conducts the audits? Navigating the DOL Audit The Checklist How Should I Prepare? Questions

3 What is a Welfare Benefit Plan?

4 What is a Welfare Benefit Plan? Employee Benefits Welfare Benefit Plan = Non-retirement employee benefits Medical, Rx, dental, vision Life, disability HRAs, FSAs May also include EAPs, wellness plans, voluntary benefits

5 Who conducts the audits?

6 The U.S. Department of Labor, Employee Benefits Security Administration (EBSA) Administers: The Employee Retirement Income Security Act (ERISA) The Consolidated Omnibus Reconciliation Act (COBRA) The Health Insurance Portability and Accountability Act (HIPAA) The Newborns and Mothers Health Protection Act (NMHPA) Employee Benefits The Mental Health Parity Act (MHPA) and the Mental Health Parity and Addiction Equity Act (MHPAEA) The Women s Health and Cancer Rights Act (WHCRA) The Genetic Information Nondiscrimination Act (GINA) The Children s Health Insurance Program Reauthorization Act (CHIPRA) The Affordable Care Act (ACA)

7 Employee Benefits Employee Benefit Security Administration (EBSA) Assistant Secretary Deputy Assistant Secretary for Program Operations Deputy Assistant Secretary for Policy Office of Exemption Determinations Office of Enforcement Office of Policy and Research Office of Health Plan Standards and Compliance Assistance Office of Regulations and Interpretations Office of the Chief Accountant Office of Technology and Information Services Office of Outreach, Education, and Assistance Office of Program Planning Evaluation and Management

8 EBSA Field Offices Employee Benefits

9 EBSA Mission Statement Employee Benefits The mission of the Employee Benefits Security Administration is to assure the security of the retirement, health and other workplace related benefits of America s workers and their families. We will accomplish this mission by developing effective regulations; assisting and educating workers, plan sponsors, fiduciaries and service providers; and vigorously enforcing the law.

10 Employee Benefits 2013 DOL Audit Statistics (EBSA) EBSA closed 3677 civil investigations and filed 111 additional civil lawsuits ( 73% of the investigations resulted in monetary penalties or other corrective action EBSA also closed 320 criminal investigations Led to the indictment of 88 individuals EBSA budget includes funding for additional audit staff to focus on ACA compliance

11 Employee Benefits What are the potential penalties for non-compliance? General ERISA non-compliance = $110 per violation per day (criminal penalties may also be imposed) Form 5500 Failure to file complete returns on a timely basis = $1,100 per day (per plan) Willful violation (individual) = Up to $5,000 in criminal penalties plus up to 1 year in prison (up to $100,000 in fines for a corporation) Knowing misrepresentation = Up to $10,000 in criminal penalties plus up to 5 years in prison ACA non-compliance = $100 per day per affected participant

12 Employee Benefits Actual Penalties that have been imposed on Employers

13 Navigating the DOL Audit

14 Employee Benefits What Triggers a DOL Audit? 1. Participant Complaints May be generated by complaints regarding the retirement plan, FLSA issues, claim denials, etc. 2. Form 5500 incomplete or inconsistent information (or failure to file) 3. National DOL Priorities or Projects ( Example: Health Benefits Security Project focuses on ACA compliance 4. Regional DOL Initiatives and Random Audits 5. Insurance Carrier or TPA audit

15 Employee Benefits What will the DOL/EBSA be looking for during an audit? 1. Have 5500 Forms been filed correctly and on time? Required for any welfare benefit plans with 100 or more participants at the beginning of the plan year 2. Does the firm have a compliant Summary Plan Description and Plan Document? Has the SPD been distributed to all plan participants Have Summaries of Material Modification been distributed to participants? 3. Does the organization comply with HIPAA? Portability provisions Pre-X notices, Creditable Coverage Notices, etc. Privacy and Security Provisions 4. Have all required notices been provided to participants? WHCRA, NMHPA, CHIPRA, HIPAA, ACA, etc. 5. Does the organization comply with COBRA?

16 Employee Benefits The DOL Audit Process 1. EBSA sends Audit Letter and Document Request to Employer 2. EBSA conducts Onsite Investigation and Interviews 3. EBSA identifies potential ERISA violations Voluntary Compliance Notice Letter describes corrective actions needed Plan sponsor should investigate validity of DOL findings Example: EBSA claims employer failed to provide SMMs to DOL for plan changes (this is NOT required by ERISA) If no violations are found, EBSA will issue a closing letter 4. EBSA creates a settlement agreement (if violations are found) 5. EBSA issues closing letter once voluntary compliance is achieved

17 The DOL Checklist

18 Employee Benefits The DOL Audit Process A Typical Document Request Insurance policies/plan documents Summary Plan Descriptions (SPD) this is not your plan description Open enrollment communications 5500 filings with required Schedules (Pension and Welfare Plans) Summary Annual Report Important Disclosure documents (WHCRA, CHIPRA, NMHPA) HIPAA portability notices Pre-X notices, special enrollment rights, certificates of creditable coverage HIPAA Privacy & Security documents ACA required notices (Grandfathered status, Exchange notice, etc.) COBRA compliance documentation

19 How Should I Prepare?

20 Employee Benefits How should I prepare? 1. Continue to get educated and trained Don t assume carriers and TPAs are keeping you in compliance Seminars / training 2. Be proactive Generate any missing documents Keep organized files and records Pursue Voluntary Compliance Programs 3. Organize the Response Team ASAP Designate a single contact person Contact your attorney Consult with your consultant/broker and any service providers

21 Employee Benefits How should I prepare? 4. Provide a timely response Treat the audit as a priority If more time is needed, request more time 5. Review documents prior to handing them over Provide only what is requested Neat, organized, printed 6. Prepare for interviews Be cooperative Image and confidence

22 Employee Benefits How should I prepare? 7. Keep an audit file, including responses 8. Request a closing conference if not offered one Hear them explain their findings Serves as an opportunity to clarify any misunderstandings 9. Don t assume DOL findings are accurate Challenge where appropriate 10.Consult legal counsel before entering into settlements

23 Employee Benefits Voluntary Compliance Programs Delinquent Filer Voluntary Compliance Program (DFVCP) Encourages plan administrators to bring plans into 5500 filing compliance Plans will pay significantly reduced fines to come into compliance Voluntary Fiduciary Correction Program (VFCP) Encourages plan officials to voluntarily report and correct ERISA violations without becoming subject to enforcement action

24 Questions after today? Contact your Hylant representative or questions to: