DOL audits: What you need to know

Corporate Synergies' Compliance Department experts

The United States Department of Labor (DOL) is now auditing group health and welfare benefits plans. The audits represent a huge shift in focus, and your organization may have to scramble to catch up. The big change is that the government is even auditing these plans in the first place.

In the past, it was common to expect oversight of pension and 401(k) plans, but now with healthcare reform under way, the focus has shifted to health and welfare benefits plans. You need to be aware of all the documents the DOL will ask you to provide in order to alleviate the risk of a lengthy, painful audit and subsequent penalties.

First, you need an ERISA-compliant plan document and a summary plan description, which includes the terms of the plan (eligibility, benefits, etc.). In addition, collect all insurance contracts and, if your plan is self-insured, gather all contracts for claims processing, administrative services and reinsurance.

You must also make sure you have documents that describe the responsibilities of both the employer and employee with respect to the payment of the costs associated with the purchase of health and welfare benefits.

In accordance with the Health Insurance Portability and Accountability Act of 1996 (HIPAA), there are a number of documents you must share with the auditors:

  • A copy of the plan’s rules for enrollment eligibility and terms;
  • A sample of the certification provided to employees who have lost healthcare coverage since January 1, 2009 (or will be provided to those who may lose coverage in the future); and
  • A copy of the record or log of all Certificates of Creditable Coverage for individuals who lost coverage under the plan or who have requested certificates.

There are several more documents that fall under the HIPAA umbrella. Consult your group employee benefits broker or third party benefits administrator for more details on HIPAA paperwork.

Make sure you have copies of the plan’s rules regarding coverage of medical/surgical and mental health benefits, the Newborns’ Act notice, information on rules in connection with childbirth, and the Women’s Health and Cancer Rights Act’s benefits.

The DOL is also interested in your efforts toward health and wellness and disease management programs. Be sure to make your wellness program details and disclosure statement available in writing.

If your health plan is claiming grandfathering under the Affordable Care Act, then you also need to gather and organize related records about coverage that was in effect on March 23, 2010. If your plan is not grandfathered, there are a host of documents you will need to furnish regarding provider choice and appeals process to verify your plan complies with healthcare reform.

In summary, you should being doing your homework now, before an audit occurs. It is important to get your paperwork in order. You may need to devote dedicated staff hours to the process, but it’s better to get it done and spend the money now rather than get hit with substantial penalties in the future.