Can your benefit plans withstand scrutiny from the Department of Labor, the Internal Revenue Service or Treasury Department, the Department of Health and Human Services, or simply from your own internal auditors? Don’t wait to learn the hard way (think penalties for noncompliance). Read along for a closer look at what you need to know to measure up in case the auditor comes knocking. Part of the 2016 CBIZ B & I Webinar Series.
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Audit Alert: How to Keep Your Benefits Plans in Good Order
1. Audit Alert:
JUNE 21, 2016
A CBIZ Benefits & Insurance Services Program
How to Keep Your Benefits Plans in Good Order
2. Today’s Speaker
2
KAREN R. MCLEESE, ESQ.
VICE PRESIDENT - REGULATORY AFFAIRS
CBIZ BENEFITS & INSURANCE
SERVICES, INC.
Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016
3. Today’s Agenda
3
Sources of Plan Audits
Plan Fiduciary Obligations
Plan Administration
Disclosures
Record Retention
Reporting
Updated Worksite Postings
Appendix
Welfare and Retirement Plan Disclosures
Government Compliance Tools
Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016
4. Who Initiates Audits?
4
U. S. Department of Labor
Employee Benefits Security Administration (EBSA): Welfare benefit
plans including Affordable Care Act (ACA) compliance and
retirement plans subject to ERISA
Wage & Hour Division: Compliance with Family and Medical Leave
Act (FMLA) and Fair Labor Standards Act
Internal Revenue Service (IRS) and U.S. Department of
Treasury
Welfare benefit plans, including ACA compliance and retirement
plans
Independent Contractor vs. Employee
Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016
5. Who Initiates Audits?
5
U. S. Department of Health and Human Services (HHS)
Health plans including ACA compliance
HIPAA Administrative Simplification Rules (Privacy, Security and
Breach); also enforced by U.S. Department of Justice and State
Attorneys Generals
Other federal and state government agencies regulating
employment matters
Self-audit, internal or external
Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016
6. Internal review and analysis of plan filings by governing
agency(ies)
Outside sources such as HHS, state insurance
department, industry journals or newspapers, patient
advocacy groups, private litigation, etc.
Complaints filed by participants and beneficiaries
What Triggers an Audit?
6 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016
7. Who Is a Plan Fiduciary?
Named Fiduciary
Designated in Plan Document
Authority to Manage Plan
Types of Named Fiduciaries
• Entity/Corporation
• Named Position
• Specific Individual
Fiduciary by Action
Anyone who exercises control by virtue of actions and relationship to
plan, such as investment manager, plan consultant, attorney, accountant
Final investment advice regulations (issued April 8, 2016) defines
fiduciary as one who receives compensation for providing individualized
or specifically directed advice to retirement plan sponsors, plan
participants or Individual Retirement Account (IRA) owners
7 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016
8. Who Is a Plan Fiduciary?
1. Has discretionary authority or control over management of the plan
and plan assets
2. Acts solely in the best interest of plan participants and beneficiaries
3. Has duty of undivided loyalty
4. Uses plan assets for the exclusive purpose of:
Providing benefits for participants and beneficiaries; and
Paying reasonable expenses of plan administration (settlor vs.
plan expenses)
5. Acts with care, skills, prudence and diligence as a prudent person
would in a similar circumstance
6. Diversifies investments (if applicable)
7. Follows the terms of the plan (unless inconsistent with the law)
8 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016
9. Fiduciary Obligations - Plan Operations
1. Make certain:
Written plan documentation is clear and communicated;
Plans are operated in accordance with their terms for the
exclusive benefit of participants and beneficiaries; and
Various discrimination rules applicable to all plans are
satisfied
2. Ensure employee contributions are timely deposited
3. Use diligent processes for hiring and monitoring of service providers
4. Determine whether fees and expenses are reasonable, and
determine which ones can be paid by plan
5. Monitor the plan’s benefit and claims procedures
9 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016
10. Fiduciary Obligations - Plan Disclosures
Disclosure obligations applicable to all welfare and retirement
plans subject to ERISA:
1. Summary Plan Description (SPD): Detailed summary of plan
provisions relating to eligibility, benefits, plan operations,
funding, claims procedures, and Statement of ERISA Rights
2. Summary of Material Modification (SMM)
3. Notice of Material Reduction in Benefits (health plans only)
4. Summary Annual Report (SAR)(if applicable)
See Appendix for additional types of notices required to be disclosed by
welfare and retirement plans to plan participants
10 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016
11. Electronic Disclosure of Required Documents
All ERISA Title I disclosure documents (SPD,
SMM, SAR, etc.) can be distributed electronically
to both participants and beneficiaries
IRS/Treasury have different electronic disclosure
rules depending on document; most require
affirmative consent
11 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016
12. DOL Electronic Disclosure Requirements
Individuals with employment-based access to employer’s electronic
system:
1.Must have access to computer and network; and
2.Plan administrator must ensure receipt of the document
Individuals without employment-based access to employer’s
electronic system must:
1. Give written consent to the electronic disclosure;
2. Provide his/her email address; and
3. Be given applicable hardware and software requirements necessary to
access the electronic disclosure.
All electronic disclosures must provide a clear statement that a paper
copy of the document can be requested
Critical distinction between furnishing documents vs. making
documents available and posting on internal or external website
12 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016
13. Fiduciary Obligations - Correcting Plan Violations
DOL Programs
Voluntary Fiduciary Correction Program (VFCP)
encourages employers to comply with ERISA by
voluntarily self-correcting certain violations
Delinquent Filer Voluntary Compliance Program
(DFVCP) assists late or non-filers of the Form 5500 in
coming up to date with corrected filings
13 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016
14. Fiduciary Obligations - Correcting Plan Violations
IRS Programs
Welfare benefit plan violations must be self-reported
on Form 8928
Retirement plan violations processed via Employee
Plans Compliance Resolution System (EPCRS):
Self-Correction Program (SCP)
Voluntary Correction Program (VCP)
Audit Closing Agreement Program (Audit CAP)
14 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016
15. Fiduciary Obligations - Record Retention for
Benefit Plans
General rule of thumb: Keep records for 8 to 10 years
ERISA and HIPAA: 6 years from last date record used
Equal Employment Opportunity Commission (EEOC)
and state laws may have different employment-related
document retention requirements
Some records must be kept longer, i.e., the life of the
participant
Both Internal Revenue Code and ERISA provide for
electronic maintenance of records
15 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016
16. Fiduciary Obligations - Plan Reporting
Welfare and Retirement Benefit Plans subject to ERISA
Form 5500
Welfare Benefit Plans (if applicable)
Forms 1094 and 1095
Multiple Employer Welfare Arrangement: Form M-1 and Form
5500
Medicare Part D: Disclosure to CMS
Form W-2
Dependent care assistance program
Aggregate cost of health care coverage
Health Savings Account (HSA) contributions
Disability income
Group term life insurance
16 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016
17. HIPAA Privacy, Security and Breach Audits
Administrative Simplification Rules enacted by the Health Insurance
Portability and Accountability Act (HIPAA), as amended by Health
Information Technology for Economic and Clinical Health
(HITECH) Act
These laws require protection of individually identifiable health
information (PHI) by covered entities, defined as:
Health Care Providers
Health Care Clearinghouses
Health Plans – both fully insured and self-funded plans
Business Associates
17 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016
18. HIPAA Privacy, Security and Breach Audits
HHS Office of Civil Rights (OCR) required to conduct
periodic audits of covered entities to ensure
compliance with laws and appropriate safeguards in
place to protect and secure PHI.
Phase 2 Audits currently underway
These rules will be more fully discussed in upcoming
CBIZ B&I Webinar on Sept. 20, 2016:
Protecting Employee Personal Information: Know the
Right Thing To Do
18 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016
19. Updated Workplace Postings
Equal Employment Opportunity Commission (EEOC) enforces
Title VII and related employment-based discrimination laws
Penalty for failure to post the “Equal Employment Opportunity
is the Law” posting in all affected work places has increased
from $210 to $525 per violation
FMLA covered employers (50+ employees) required to post a
general notice of FMLA information in their worksite locations
DOL updated a worksite poster that can be used to notify
employees of their FMLA rights and protections
19 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016
20. Know Your Workforce
Employee vs. Independent Contractor
Exempt vs. Nonexempt
20 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016
21. Types of Documents Reviewed in Audit
All plan documents, including related documents
All meeting minutes relating to the plan
All service contracts including fee schedules
All expenses paid by plan
All documents showing participant contributions
All employment policies applicable to plan or policy
Proof of bond (if applicable)
All required reports and related audits to government
All required disclosure notices for COBRA, HIPAA, ACA, mental
health parity laws, wellness programs, etc. (see Appendix)
21 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016
22. Consider performing periodic internal audits of all plan
documents and related disclosures and internal
policies, processes and procedures to ensure
compliance with all applicable laws
Establish ongoing protocols for reviewing and
maintaining practices and procedures to ensure
compliance with all applicable laws
What Should an Employer Do?
22 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016
23. If an outside audit request is received:
1. Make the audit request a high priority
2. Engage legal counsel immediately
3. Create a positive cooperative relationship
4. Assign a point person and coordinate with all
players
5. Brief management on relevant issues
6. Respond timely to all requests
7. Don’t panic
What Should an Employer Do?
23 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016
24. QUESTIONS?
The information contained herein is not intended to be legal, accounting, or other
professional advice, nor are these comments directed to specific situations. The
information contained herein is provided as general guidance and may be affected by
changes in law or regulation. The information contained herein is not intended to replace
or substitute for accounting or other professional advice. Attorneys or tax advisors must
be consulted for assistance in specific situations.
This information is provided as-is, with no warranties of any kind. CBIZ shall not be liable
for any damages whatsoever in connection with its use and assumes no obligation to
inform the reader of any changes in laws or other factors that could affect the information
contained herein.
24 Audit Alert:
How to Keep Your Benefits Plans in Good Order
June 21, 2016
25. APPENDIX
Welfare and Retirement Plan Disclosures
Government Compliance Tools
25 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016
26. All Welfare and Retirement Plans Subject to ERISA
1. Summary Plan Description (SPD): Detailed summary of
plan provisions relating to eligibility, benefits, plan
operations, funding, claims procedures, and Statement of
ERISA Rights
2. Summary of Material Modification (SMM)
3. Notice of Material Reduction in Benefits (health plans
only)
4. Summary Annual Report (SAR)(if applicable)
26 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016
27. Additional Welfare Benefit Plan Disclosures
ACA Required Disclosures
Summary of Benefits and Coverage (SBC)
Notice of Marketplace Options
Notice of Grandfathered Health Plan Status (if applicable)
Benefit Statements: Form 1095-C or Form1095-B
Extension of Dependent Coverage to Age 26
Primary Care Physician (PCP) Designation
Right to Direct Access to OB/GYN Providers Without Prior Authorization or
PCP Referral
Coverage of Out-of-Network Emergency Services
Coverage of Preventive Services
30-day Advanced Notice of Rescission of Coverage
60-day Advanced Notice of Material Modification in Benefits
27 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016
28. Additional Welfare Benefit Plan Disclosures
Claims, Appeals & External Review Documentation (ERISA
and ACA)
COBRA Notices:
Initial (General) COBRA Notice
Election Notice
Notice of Ineligibility
Notice of Early COBRA Termination
Conversion Notice
Continuation Rights for Students on Medical Leave
(“Michelle's Law”)
Initial and Annual Women’s Health and Cancer Rights Act
Notice
28 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016
29. Additional Welfare Benefit Plan Disclosures
Newborns’ and Mothers’ Health Protection Act Notice
HIPAA Waiver of Coverage and Notice of Special Enrollment
Rights
HIPAA Notice of Privacy Practices and Triennial Reminder
Notice
Medicare Part D – Notice of Creditable Coverage
Medicaid/Children’s Health Insurance Program (CHIP)
Premium Assistance Notice
Qualified Medical Child Support Order (QMCSO) Notice
29 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016
30. Retirement Plan Disclosures
Participant-Level Fee Disclosure
Disclosure of plan-related and investment-related information to
participants from plan administrator
1. Plan-related disclosures must be provided annually, prior to individual’s
ability to make an investment, including individual and plan-related
administrative fees and/or expenses
2. Provide investment-related information identifying performance and
benchmarking data together with fees and expenses in comparative
format
30 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016
31. Retirement Plan Disclosures
Participant-Level Fee Disclosure, continued
3. Subsequent disclosures required:
Changes to plan information and quarterly disclosures of actual
charges or deductions
Ongoing disclosures, such as voting, tender, or similar investment-
related documentation, prospectuses, financial statements,
shareholder reports
31 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016
32. Other Retirement Plan Disclosures
Automatic Deferral: Annual written notice of automatic
deferral and investment provisions
Benefit Statement: Written quarterly statements of account
balances and investments for participant-directed plans
Black-out Notice: 30-day advance written notice of
temporary restriction on normal right to direct and diversify
investments
Default Investment: Annual written notice describing
participants' rights and obligations with respect to default
investments
32 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016
33. Other Retirement Plan Disclosures
Deferral Elections: Provide participants with an effective
opportunity to make or change deferral elections at least
once a year
Distribution Notice and Consent
Diversification Notice for Employer Stock
Qualified Domestic Relations Order (QDRO) Notice
Rollover Notice
Safe Harbor Plan Notice
33 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016
34. EBSA Compliance Assistance Tools
Compliance Assistance Web Page:
http://www.dol.gov/ebsa/compliance_assistance.html
Health Benefit Plan Self-Compliance Tools:
HIPAA & Other Health Care-Related Provisions Tool
http://www.dol.gov/ebsa/pdf/part7-1.pdf
Affordable Care Act Provisions Tool
http://www.dol.gov/ebsa/pdf/part7-2.pdf
34 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016
35. EBSA Compliance Assistance Tools
Fiduciary Education Campaign for Health Plan and
Retirement Plan Sponsors Web Page
(http://www.dol.gov/ebsa/fiduciaryeducation.html)
Live Seminars
Webcasts: Getting It Right - Know Your Fiduciary
Responsibilities
Publications
ERISA Fiduciary Adviser
35 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016
36. EBSA Compliance Assistance Tools
Correction Programs
(http://www.dol.gov/ebsa/compliance_assistance.html#section8)
Voluntary Fiduciary Correction Program (VFCP) encourages
employers to comply with ERISA by voluntarily self-
correcting certain violations
Delinquent Filer Voluntary Compliance Program (DFVCP)
assists late or non-filers of the Form 5500 in coming up to
date with corrected filings
36 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016
37. IRS Compliance Assistance Tools
Self-Reporting – Welfare Benefit Plan Violations
Failure to comply with certain federal laws must be self-reported to IRS on Form 8928
Includes violations relating to:
COBRA continuation coverage provisions
Certain ACA provisions including insurance market reforms and claims, appeals and external review
processes
HIPAA portability, access and renewability provisions
Genetic Information Nondiscrimination Act of 2008 (GINA) - prohibits discrimination based on a
health factor, including genetic information
Mental Health Parity Act and the Paul Wellstone and Pete Domenici Mental Health Parity and
Addiction Equity Act of 2008 (requires parity between mental health benefits and medical/surgical
benefits)
Mothers' and Newborns’ Health Protection Act (requires minimum hospital lengths of stay in
connection with childbirth)
“Michelle’s Law” (requires continued coverage for post-secondary students with a serious medical
condition)
Comparable employer contributions to Archer MSAs
Comparable employer contributions to Health Savings Accounts
37 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016
38. IRS Compliance Assistance Tools
Self-reporting welfare benefit plan violations, continued
Entity reporting on Form 8928: Employer/plan sponsor of group health
plan, insurers, third-party administrators (TPAs)
Penalty for failure to comply with laws: Excise tax of $100 per day/per
affected individual
Failure to self-report can result in additional penalties (up to 25% of tax
due plus interest)
IRS Web Page: Affordable Care Act Tax Provisions for Employers
(http://www.irs.gov/Affordable-Care-Act/Employers)
Small Business Health Care Tax Credit
Employer Shared Responsibility Provision
Information Reporting by Applicable Large Employers and Insurers
38 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016
39. IRS Compliance Assistance Tools
Retirement Plan Sponsors
(http://www.irs.gov/retirement-plans)
Reporting and Disclosure Guides
Phone Forums and Webinars
Fix-it Guides - to find, fix and avoid mistakes in 401(k) plans, 403(b)
plans, Salary Reduction Simplified Employee Pension Plans
Dedicated IRS Web Page for “Correcting Plan Errors”
(http://www.irs.gov/Retirement-Plans/Correcting-Plan-Errors)
Includes information about the Employee Plans Compliance Resolution
System (EPCRS) programs:
Self-Correction Program (SCP)
Voluntary Correction Program (VCP)
Audit Closing Agreement Program (Audit CAP)
39 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016
40. HIPAA Privacy, Security and Breach Audits
OCR’s Audit Protocol
(http://www.hhs.gov/hipaa/for-professionals/compliance-
enforcement/audit/protocol/)
Tool outlining types of information and procedures reviewed during audit
to substantiate compliance by covered entity relating to:
Notice of privacy practices
Individual rights
Use and disclosure of PHI
Business associate agreements
Amending PHI and accounting of disclosures
40 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016