ERISA Health & Welfare Benefit Plans: Helpful steps to survive an audit from the DOL

ERISA Health & Welfare Benefit Plans: Helpful steps to survive an audit from the DOL

By Attorney Caitlin M. Gadel

The Employee Retirement Income Security Act (ERISA) sets out minimum standards for establishing, administering, documenting, amending, and terminating pension and health and welfare plans. Most employers who sponsor employee benefit plans are subject to ERISA (church plans are exempt and so are public employers). Employers that sponsor plans that offer benefits such as medical, surgical, hospital care, sickness, accident, death or day care benefits should review their plans to make sure they are ERISA compliant.

The biggest problem employers who sponsor health and welfare benefit plans face is insufficient plan documentation. ERISA requires employers and plan administrators to distribute a Summary Plan Description (SPD) to plan participants and beneficiaries. This document must contain very specific information such as the employer name, address, TIN, the plan year, the plan number, the name and address of the agent designated for service of legal process. These items are generally not included in an insurance company’s summary of benefits. Further, it is the responsibility of the plan sponsor—(i.e., the employer)—to make sure plan participants have an SPD. The SPD should be written so the average participant can understand the terms of the plan.

Recently, the DOL has been auditing more health and welfare plans. When the DOL audits a health and welfare plan, it looks for compliance with a variety of federal statues and regulations. In addition to ERISA, during an audit, the DOL may check for compliance with HIPAA rules, the Affordable Care Act, COBRA and other federal laws impacting welfare benefit plans. These DOL audits require sponsors to produce, on short notice, documentation to demonstrate compliance with these various laws, including SPDs, Summary of Benefits and Coverage (“SBCs”), copies of required notices provided to employees, as well as contracts with insurers and third party administrators. Last year, the DOL closed 3,677 ERISA civil investigations with 2,677 (72.8%) resulting in monetary penalties or other corrective action. In 2013, monetary penalties totaled $1.69 billion, from enforcement, voluntary corrections, and informal complaint resolutions.

There are 3 easy ways an employer can prepare for a potential DOL audit. First, employers should review their health and welfare plans to make sure they have all the required documents. Employer should be able to easily locate a copy of the SPD, SBC, and COBRA, FMLA, and GINA notices. Second, employers should make sure they are administering their plans in accordance with the terms and conditions laid out in their plan documents. Lastly, employers should choose one person to be the point person for benefit plan compliance. Having one person, who knows where the plan documentation is filed, and is familiar with the plan administration and the benefits offered, will make any type of investigation, especially a DOL audit investigation much easier to navigate.

If you find your health and welfare plans are missing compliance pieces, contact Caitlin M. Gadel at or any of the other Seaton, Peters & Revnew attorneys for help keeping your benefit plans in compliance.

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