Group Benefits: Required Compliance Documents
Required Information that Carrier Documentation Lacks
The Department of Labor requires certain compliance documents for all groups offering benefit plans (health, dental, vision insurance, etc) to their employees. The IRS also requires certain documents if group benefit plan premiums are being deducted from employee paychecks on a pre-tax basis. More and more audits are happening for all business sizes by the Department of Labor- in 2017, ERISA DOL fines were up 72% and the EBSA expects that to increase. Insurance certificates and benefit summaries do not fulfill the ERISA requirements as they don’t include the required or recommended provisions that protect the plan and the employer:
Hours an employee must work for eligibility is not covered
Waiting period is not covered
Does not include any ERISA plan numbers
Does not specify who is the Plan Administrator (Employer or Carrier)
Does not identify if the employer is part of the Pay or Play Provision of the Affordable Care Act
Does not have the Grandfathered Disclosure which must be included if the medical plan is still grandfathered status
Q&As on Risks You Might be Taking
What if an employer has not been compliant (offering group health plan with no ERISA Wrap/ SPD), moves into compliance (has a wrap/ SPD plan established), and then gets audited- how far back would the IRS look back to fine?
Specific to the auditor, some auditors camp outside your office until every stone is overturned. In other words, they are not consistent. The more you can produce up front when an auditor is asking for these things, the better it is for you.
“If I had the document but didn’t prove that I distributed it to employees, can I still be fined?”
Yes- You are subject to the fines, but the more you can produce up front, the less backdating of fines there will be, and the quicker they will be to move on. For example, if they see payroll and see that you are pre-taxing through payroll, they will be asking for your pretax document.
“How about I wait until I have an audit to get the wrap document.”
You are taking a pretty big risk by doing this for several reasons. (1) Your document can’t be backdated, and (2) the auditor could potentially go back two years. (3) If you’re getting an audit and then they request a document from you, and you turn in your document that it’s dated that month, they will see that, and you will be fined.
Part of our services here at Zeutenhorst Financial are to help educate you and make you aware of how to be in compliance in the event of an audit. If you are not sure if you have an ERISA Wrap and Cafeteria/ POP Plan or would like our assistance in getting your plan documents setup, just get in touch.
Head over to our resources page if you would like to see more information on how to set up an ERISA Wrap Document, or a Pre-tax document: