Increasing Number of DOL Audits Threaten Employers with Large Fines – Are You Ready?

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The Department of Labor (DOL) has made it clear that the honeymoon is over and full compliance with the Affordable Care Act and ERISA are expected.

It is clear that the DOL has hired thousands of new auditors to ensure compliance with the Affordable Care Act.  What is also clear is that many employers aren’t prepared for the possibility of an audit. Although many audits are triggered by an employee complaint, most are random, or triggered by a failure to file.

Recently released statistics show that employer health and welfare plans are being audited at a higher rate than ever before with more than 37% of the audits resulting in fines greater than $10,000, with 5% of the fines exceeding $50,000.

What are the auditors looking for?  Below is just a small sample of the documents and requirements reviewed in the audit process:

  • Formal plan document (Summary Plan Description) required by ERISA
  • List of all plan service providers
  • Form 5500 information
  • HIPAA compliance documents
  • COBRA compliance proof
  • Documented compliance with mandated notices such as Women’s Heath and Cancer Rights Act, and CHIP
  • ACA required Summary of Benefits and Coverage
  • Exchange Notice/SHOP Notice

The effort to comply with this increasing burden of regulation is a time-consuming task that frequently is delayed in favor of more pressing issues facing employers.  ABS can help you be ready for a DOL audit with a wide range of assistance available, from personal visits from our PHR-certified staff, to free access to our 40-page DOL Audit Guide that is a wealth of information focused on getting your firm prepared in case of an audit.  Contact us to learn more!

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    By: Gregg Kennerly, CHRS

    The Affordable Care Act’s impact on Virginia employers so far isn’t “affordable”. Health Plans in the Commonwealth have begun releasing rates for the all-important December contract renewal dates. Over 30,000 Virginia businesses deferred policy anniversary dates until 12/1/2014 in order to delay the effects of the Affordable Care Act (ACA) as long as possible.

    Although it was anticipated that rates would rise, the reality appears to be much worse than projected, with increases of between 50% and 125% common. The root cause of these huge increases in health care costs lies in the details of the ACA. New mandated fees, taxes and mandated benefits coupled with new rating regulations which “socialize” health premiums, have combined to create disastrous cost increases for many employer plans. Details of the ACA’s rate impact can be found in this article,”The Coming Disaster”.

    No longer able to delay the impact, employers and their broker/consultants are responding with more cost-sharing, reduced benefits, or both. Some employers have elected to simply dissolve their group health plan and offer taxable subsidies to employees for individual plans.

    Are health insurers to blame? Probably not. The ACA contains strict regulations which require health insurers to return any excess premiums to policyholders at year end. Insurers are required to pay out 80% to 85% of premiums collected in claims payments. The balance is for risk, administrative costs of paying benefits, issuing policies, compliance, etc.

    Political arguments aside, the truth is that the unintended consequences of the ACA are creating unprecedented hardships for Virginia’s employers and their employees. There will be short and long term impacts that are only beginning to be felt, but it is certain that most of the effects are not good for the majority of Virginians.

     

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