Fear the DOL health plan audit

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Perhaps you have heard that the DOL expressed its goal to audit all employee benefit plans by the end of 2015. A daunting task, yes, but most agree the task is logistically impossible. Game on at the DOL means game on for employers. Are your employers prepared for a DOL audit? Are you prepared to advise them on what an audit involves and the fines for non-compliance?

A health and welfare plan audit is a review of documents and other plan materials to ensure plan sponsors comply with federal law by holding the correct documents and administering those documents consistent with federal laws and regulations. A health plan auditor looks at many things, each with a nod toward compliance or a menu of fines for non-compliance. Following is a list of items examined from actual DOL audits:

  • Plan documents for each plan along with any amendments. (Content in all plan documents must comply with ERISA regulations.)
  • Trust agreement (if any) and all amendments.
  • Current SPDs.
  • Form 5500 and accompanying schedules for most recent plan year and previous three years.
  • Listing of all current service providers and those from the past three years.
  • All current contracts with administrative service providers on the plan and most current fee schedules.
  • All insurance contracts between plan and service providers.
  • Name, address and telephone number of plan administrator.
  • Sample HIPAA certificate of creditable coverage and proof of compliance with on-time issuance of COBRA notices.
  • Notice of special enrollment rights and record of dates when notice was distributed to employees.
  • Written eligibility criteria for plan enrollment.
  • Documentation regarding all mandatory employee notices, i.e., ERISA Statement of rights, Women’s Health and Cancer Rights Act notice, etc.
  • Copy of most recent monthly bill for premiums (if any) from insurance carrier(s).
  • Copy of check, wire transfer or other method of payment for insurance premium (if any).
  • Enrollment form(s) for the plan.
  • Employee handbook (if any).
  • All documentation of claim adjudication and payment procedures.
  • Fidelity bond (if any).


Employers fear DOL audits because noncompliance equals fines. ERISA’s reporting and disclosure requirements, for instance, carry a fine of $110 per day, per person, per violation for every plan participant who was covered under a single contract. That fine jumps to $200 for plan participants covered by a family contract. ERISA fines represent just one flag from the DOL auditor and can cost the plan sponsor dearly. Most fines for noncompliance under the ACA are not tax-deductible, either.

Producers do not have to teach employers about health and welfare plan administration, but you will score relationship points if you do. Scheduling appointments with your groups now is wise given this current season when the DOL wants to play hardball.

Maybe you do not want to educate your groups on DOL audits? Be prepared then for your competitor who reads this column or a myriad of other good pieces on DOL audits. Your competitor will wisely use this gift horse against you. You may lose the group.

Instead, why not take the occasion to meet with your clients and give them something that will protect them? You receive goodwill. Your client receives good advice that can save them money and hassle. That seems like a no-brainer strategy to me. How does this sound to you?

Davidson, CEBS, is an EBA columnist and founder of Davidson Marketing Group, FutureOffice Network and Dial FONHR. He is also on the faculty at the Sheldon B. Lubar School of Business at the University of Wisconsin, Milwaukee. Reach him at

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