DOL Health & Welfare Audits Are on the Rise: Prepare With Compliance Tools and Resources

OCTOBER 5, 2021

As demonstrated by the Biden administration’s recent release of a new COVID-19 action plan, the U.S. government and regulators play a significant role in shaping the behaviors and policies of employers. With the administration aiming to significantly boost the Department of Labor’s (DOL’s) funding for 2022 and over the next 10 years, more DOL audits could be on the horizon for employers. And if employers are not prepared, a DOL audit or investigation carries significant risk.

More DOL Audits: Increased Risk of a Costly Nightmare

The Employee Benefits Security Administration (EBSA), an agency of the DOL, is responsible for ensuring the security and integrity of private employee benefits plans in the United States. The EBSA does this in a variety of ways, including enforcement mechanisms such as audits. When a health plan is audited, typically there isn’t much advance notice, and organizations cannot stop an audit, whether it is random or for a specific reason. If an audit uncovers violations, then corrective action may be required. Such action may include paying penalties or reprocessing claims.

Additionally, with the increase in legislation and regulations affecting health plans, EBSA audits have increased in scope. With more than 20 primary categories, they now include compliance with ERISA, ACA, and MHPAEA, among others. They also typically take months, if not years, to complete.

Why an Organization May Be Audited — and How It Can Prepare

Organizations can be identified for audits for several different reasons, including:

  • Participant complaints
  • Referral from another agency (i.e., IRS refers the case to EBSA)
  • Errors or omissions in Form 5500 filings

Fortunately, by ensuring compliance in advance of an audit, organizations can prevent costly fines and save thousands, if not millions, of dollars. Following are compliance tools and resources that you should be getting from your benefits broker to assist you.

Compliance Needs Related to Health and Welfare Benefit Plans

Employers often need help navigating this ever-changing regulatory landscape. USI Insurance Services’ nationally networked, in-house team of benefits attorneys and compliance specialists provide “boots on the ground” comprehensive compliance solutions. This specialized team supports USI’s professionals and clients with respect to ERISA and other compliance needs related to our clients’ health and welfare benefit plans.

There have been many recent changes to legislative rules and regulations. Our employee benefits compliance team develops timely communication that allows us to quickly disseminate important legislative and regulatory updates to our clients. Some highlights from the past few months include:

  • White House Announces COVID-19 Action Plan. On September 9, 2021, the Biden administration announced a “Path Out of the Pandemic,” indicating actions that will be taken to increase the number of vaccinated Americans. Among other things, employers in the U.S. with at least 100 employees must ensure their workforce is fully vaccinated, or require any unvaccinated workers to produce a negative test result on at least a weekly basis before coming to work. Here’s an overview of what else the action plan lays out, as well as several questions it raises for employers.
  • Using the Group Health Plan to Encourage COVID-19 Vaccinations. In response to an uptick in questions about using benefit plan design options to encourage participants to obtain COVID-19 vaccinations, USI’s employee benefits compliance team issued helpful FAQs around the various compliance issues that arise and offered recommendations. Read more.
  • IRS Announces 2022 ACA Affordability Indexed Amount. The IRS recently announced that the ACA affordability indexed amount under the Employer Shared Responsibility Payment requirements will be 9.61% for plan years that begin in 2022. This is a decrease from the 2021 percentage amount (9.83%). Read more.
  • Some Transparency in Coverage and CAA Deadlines Delayed. On August 20, 2021, the DOL and Centers for Medicare & Medicaid Services jointly issued FAQ 49, implementing parts of the Consolidated Appropriations Act (CAA) and the Transparency in Coverage final regulations, as well as delaying several key deadlines. Read more.

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If you’d like to learn more about how USI’s employee benefits compliance services can help your organization, contact your local USI benefits consultant or email