Consultant Warns Of New DOL Audits – Are You Ready?


“The DOL has made it clear that the honeymoon is over, but it is also clear a lot of people just aren’t prepared…”

By Michael Bologna

Plan sponsors’ “grace period” for being in full compliance with key features of the Affordable Care Act is over, a benefits consultant said.

Jerry Kalish, president of the Chicago-based retirement plan consulting firm National Benefit Services Inc., said in an interview June 6 that based on discussions he has participated in with senior Department of Labor officials, that’s the DOL’s general view.

Kalish said that many plan sponsors will be caught off guard when DOL auditors come knocking.

“The DOL has made it clear that the honeymoon is over, but it is also clear a lot of people just aren’t prepared,” Kalish told Bloomberg BNA following a presentation at the American Society of Pension Professionals and Actuaries regional conference in Chicago.

Kalish said during the session that the audits would follow the DOL’s familiar themes of information, documentation and operational compliance. He said that auditors would pay close attention to key ACA requirements governing grandfathered plans, coverage for adult dependent children, lifetime and annual limits, pre-existing conditions, and claims and appeal procedures.

“What are they looking for? They are looking for information, documentation and operational compliance,” he said. “I would maintain that, functionally, preparing for a Department of Labor audit for health and welfare plans is not different, but for the subject matter, than what it is in a 401(k) or a qualified plan audit.”

Internal Controls

Speaking during the same panel discussion, benefits attorney David C. Strosnider said plan sponsors must also demonstrate that they have implemented robust “internal controls.” Specifically, he said, sponsors must provide evidence of an active and informed plan committee, committee meeting minutes and procedures.

“You can’t just look to the plan document, hand it over to DOL and say, ‘The plan document says this,’ ” said Strosnider, a partner with Roetzel & Andress in Chicago. “You have to make sure they are meeting with regularity; the meeting minutes are drafted in a way to support that you are exercising your ERISA fiduciary duty; they have people providing appropriate advice.”

Kalish warned plan sponsors to prepare for a wide range of health and welfare issues beyond the ACA—such as ones involving the Employee Retirement Income Security Act, the Health Insurance Portability and Accountability Act and the Consolidated Omnibus Budget Reconciliation Act—if they are notified of an audit.

“When they come in from an audit standpoint, it isn’t just the Affordable Care Act. It is all these other issues. It’s ERISA, it’s HIPAA, it’s COBRA, it’s the Women’s Health and Cancer Rights Act, it’s the Genetic Information Nondiscrimination Act,” Kalish said.

To contact the reporter on this story: Michael Bologna in Chicago

To contact the editor responsible for this story: Phil Kushin