DOL Audit

[pr2222]

A client's welfare benefit plan is being audited by the DOL. The auditor has provided us a list of items she wants to review. In a couple of places it says she wants a list or log of items distributed. For example, she wants a sample Certificate of Creditable Coverage and a copy of the Women's Health Cancer Notice and a list or log of all Certificates and Notices sent out since January 1, 2008. The carrier sent them out but did not keep a list or log. The carrier says there is no statute or regulation that requires them to keep a list or log. All I know is my client is the one being audited and that we will have nothing to show the auditor. Has anyone else run into this and how did it sit with the DOL?

[QDROphile]

Wow, what a helpful service provider, who was hired to be the agent of the plan administrator for purposes of compliance. The administrator is essentially telling the DOL that it complied by hiring the service provider, a presumably professional organization. A competent service provider would then offer something by way of an explanation that could be given to the DOL, such as a protocol and forms. "We don't have to" is really an insulting and unprofessional answer to a client. The DOL is looking for evidence of compliance. Something less than perfect assurance or best practices should be acceptable, and the service provider should be scrambling to come up with the best possible response. There are court decisions that discuss evidence of COBRA notices.

[pr2222]

Well, to be honest, it is one of the largest insurance carriers in the Country.

[Chaz]

Well, to be honest, it is one of the largest insurance carriers in the Country.

Frankly, that's not surprising.

[GBurns]

As far as I know, there are no statutes or regulations that require a service provider to keep such a log.

In any case, it is the employee benefit plan that is being audited so such info seems to be the purview of the Plan Administrator, who logically should be the entity keeping track of compliance issues. The Plan Administrator should have the info.

Also, the Benefits Dept should have kept a record and copies otherwise they would not have known when the enrollment period was completed etc.

I wonder how does the client know if a service provider has done the job it is contracted and paid to do, if it does not keep track of what is being done, when and how.

[mbozek]

A client's welfare benefit plan is being audited by the DOL. The auditor has provided us a list of items she wants to review. In a couple of places it says she wants a list or log of items distributed. For example, she wants a sample Certificate of Creditable Coverage and a copy of the Women's Health Cancer Notice and a list or log of all Certificates and Notices sent out since January 1, 2008. The carrier sent them out but did not keep a list or log. The carrier says there is no statute or regulation that requires them to keep a list or log. All I know is my client is the one being audited and that we will have nothing to show the auditor. Has anyone else run into this and how did it sit with the DOL?

Regulatory agencies always ask for things they are not entitled to under applicable law just to see what response they get from the plan administrator. If there is no record of which employees received the notices then respond that no list was kept. If there is no requirement to keep such a record (see Q2 below) then there is no penalty for not providing it to a government auditor.

If the auditor insists on evidence of compliance, the carrier can file an affidavit prepared by counsel that to the best of its knowledge provisions of the regs requiring notices were complied with.

Q1- Do plan administrators keep a record of all employees who are sent a 402f, J & S notice, DB funding statement, blackout notice or one of the other 50 or so notices required under the IRC or ERISA? It seems that govt agencies do not see any limits on the administrative burdens to be imposed on plan administrators in order for some bureaucrat to check off a box on an audit form. If plan administrators want proof that notices were sent to each participant then they will have to pay extra to have the records compiled and stored.

Q2 ERISA 107 provides that plan administrators required to file any report or to certify any information under ERISA keep all vouchers, worksheets, receipts and other information needed to verify such records for a period of 6 years. Is compliance with the notice requirements requested by the auditor required to be reported on the 5500 or other govt report which requires that the plan keep records of the notices sent for 6 years?