As we work towards closing out the year, I’d like to reiterate something I’ve been saying to our health and welfare employee benefits clients and friends across the country for most of 2023 — fear not the U.S. Department of Labor (DOL)!
Employers are constantly being bombarded by vendors wanting to sell new products and services that will purportedly protect the employer and their health and welfare benefits plans from the scary DOL audit. Whenever I review these products and services, two things come to mind:
- “Great, another expense for the plan sponsor.”
- “The plan sponsor is either already doing this or could easily do this themselves.”
Here’s the thing — if you’re doing the best you can to provide your employees with solid benefits and making sure that your plan operates in their best interest, you’re going to be OK. If you happen to hit a minor bump in the road and get a call from the DOL, more likely than not, they’re going to tell you to fix the issue. And that’s it.
They’re not out there to get you. They want what you want — for your employees to get their promised employee benefits in a compliant manner.
A Heightened Focus on Fiduciary Obligations
Part of the reason we’re seeing new vendors and products coming out of the woodwork comes from a heightened focus on fiduciary obligations due to the new transparency rules. I certainly don’t want to diminish the focus on these new requirements. In fact, we addressed them recently in another blog. I encourage you to give it a read if you have a quick minute.
But, most of our friends over at the DOL would tell you that the main tenets of a plan sponsor’s fiduciary obligations are the same today as they were 50 years ago. Basically, at the risk of oversimplifying things, you must do these four things:
- Work to make sure your plan is operating in the best interest of your plan participants.
- Monitor the plan and all associated costs to make sure they’re reasonable.
- Don’t use plan assets for anything other than the benefit of plan participants.
- Follow the requirements established in your plan documents.
Boom. That’s it — and hint, they’re action items you’re likely already working with us on, right?!
Focus on the Fundamentals
From there, your best protection is making sure you’re taking care of the basics. Here are a few examples, some of which are summarized from DOL materials:
Review Plan Documents
Review your plan documents and their corresponding summary plan descriptions (SPDs) to make sure they’re current. For example: Is the eligibility language accurate? Were there any changes made to your plans that aren’t reflected/are incorrectly stated in the SPD?
Review Distribution Practices
Review your distribution practices for your SPDs to make sure you’re getting them to your plan participants in a compliant manner.
Take a Look at COBRA & COBRA-qualified Beneficiaries
Double check that your COBRA Initial Rights Notice is getting to the employee and spouse within 90 days of coverage and that your COBRA Election Notices are getting out on time when someone experiences a COBRA-triggering event.
When reviewing COBRA compliance, also double check that COBRA-qualified beneficiaries have adequate information and sufficient time to exercise their open enrollment rights the same as similarly situated employees.
Note: The end of the year is also a good time to review COBRA premiums for the upcoming 12-month determination period for the calendar year plan.
Work With Our Employee Benefits and Compliance Experts
These compliance basics are well within the wheelhouse of just about any Human Resources team I know. If you’re reading this and you’re unsure where you and your plans stand as we go into 2024, get in touch with us; that’s what we’re here for.
