The DOL recently added 10,000 new investigators, and has stated it intends to audit every applicable employer. So until the ACA is repealed, employers must prepare for a visit from the feds.
While the thought of an ACA compliance audit is enough to send even the most calm and collected benefits pros reaching for the Tums, there are a number of preemptive steps employers can take to virtually ensure they come out unscathed.
During a recent presentation, Gary Kushner, the president and CEO of consulting and benefits administration firm Kushner & Company, covered what employers can do to make sure DOL investigators walk away from your company without finding a violation. Here are the highlights:
1. Review your SPD documentation process. During an audit, the feds will not only expect employers to have an up-to-date summary plan document (SPD) and/or plan doc, they’ll also want proof you actually distributed those documents to employers. Many firms don’t have that proof.
One simple way to create proof: Have all relevant parties sign off on a Word document that says, “On X-date, I distributed these SPDs to employees.”
(Note: Apply the same process to your ACA Summary Statements, keeping in mind the changes that kick in the first day of the first plan year that begins on or after April 1, 2017.)
2. Review plans for the three bars of ACA compliance. Health plans must meet the Minimum Essential Coverage, Minimum Value and Affordability thresholds to pass muster with the feds.
Kushner offered an effective tip for satisfying all three “bars” of compliance here: Take the lowest paid group of workers and see if they meet the thresholds. If so, your entire workforce will comply with the ACA coverage requirements.
3. Doublecheck your measurement, stability and administrative period calculations. Look to make sure the calculations don’t include the more common pitfalls – e.g., using shorter measurement periods than stability periods, skipping the administrative period (For more details on this, visit the WNB&C website and search ACA compliance).
Notices, ‘wraps’ and tests
4. Establish a process for distributing and documenting receipt of all health & welfare plan notices.
Of the 30-plus ACA requirements that can lead to $100 per participant (up to $500,000 max) penalties, many involve written notices. Plus, there’s a host of pre-ACA notices to worry about as well.
Like the SPD distribution, firms must have proof of delivery. Again, a Word doc will suffice. Example: A doc signed by HR stating, “As part of our open enrollment package, we have sent X notices to employees.”
5. Look for ways to reduce compliance burdens. In many cases, a “wraparound” document would reduce employers’ compliance burden and Form 5500 filing requirements.
Reason: The wrap document allows employers to file only one Form 5500. That eliminates the possibility of being penalized for multiple Forms 5500 if there are errors.
6. Determine if any additional nondiscrimination testing applies. As Kushner reminded attendees, testing must be performed on any underlying health and welfare plans. While testing may require outside help, it’s well worth the trouble.
If the DOL determines you haven’t done the proper testing, it will audit your plans going back six years.
Based on “ACA and ERISA Compliance: 11 Steps to Avoid (or Survive) a DOL Audit,” by Gary B. Kushner, presented at the SHRM 2016 Conference & Exposition