Increase in Department of Labor audit activities

As we start the New Year, I want to alert you to a trend I see developing in the Employee Benefits Security Administration at the Department of Labor (DOL). The government is on a hunt for money to pay for the Affordable Care Act (ACA) and, while the fines from the ACA don’t fully kick in for another couple years, there is one law that applies to all health plans and that has been largely ignored by employers and the DOL — until now. Employee Retirement Income Security Act (ERISA) applies to every employer that offers a group health plan, regardless of size, and the DOL knows that almost all employers are non-compliant. We have seen more audits in the last 2 years than over the previous 26 years. This anecdotal experience seems to be supported by the reports that the DOL is hiring a large number of new agents.

I recently came into possession of an audit notice from an associate whose client is being audited. To my shock, I discovered that this group only has 11 employees and it appears this audit is random and not the result of a complaint filed by an employee.

If we have not already outlined a plan document service for your business, I will be contacting you soon to discuss benefit plan compliance and your plan for handling an audit. You may not have considered an additional expense concerning your insurance benefit coverage at this time, but it pays to be prepared. ERISA has been around for 40 years and has a substantial amount of case law. If your firm is audited and you do not have the required documents, your firm will be fined and there will be little recourse.

For clients currently using Visor’s recommended document service, you already have all the required plan documents and notices. Please review the attached letter for a list of procedural records which will need to be created by your firm. My sense is that if you do receive an audit notice and can respond quickly with all the documents, the DOL will be satisfied and move on.

Please contact me if you have any questions or would like to get started on your plan documents to protect your business. Feel free to pass this letter and information on to any clients, vendors, or other business associates. Very few firms are prepared. Let’s get ready.

See example document.

Bill Hill

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