What to Expect from a Health Plan Audit

Best practices for an investigation by the Department of Labor

What to Expect from a Health Plan Audit

The U.S. Department of Labor (DOL) has been ramping up its health plan investigations since 2012 under the nationwide Health Benefits Security Project, said a department official during an Oct. 6 panel discussion in Washington, D.C.

The talk took place at the Health and Welfare Benefit Plans National Institute, a two-day legislative and regulatory update for employee benefits practitioners hosted by the American Bar Association's Joint Committee on Employee Benefits.

The DOL's Employee Benefits Security Administration (EBSA) has been focusing its investigations on systemic problems with plans, claims procedures and service providers, according to Suzanne Bach, acting chief of EBSA's field operations division.

EBSA regulates about 2.3 million group health plans, as well as other benefit plans that are covered under the Employee Retirement Income Security Act.

"The compliance needs for health and welfare plans have snowballed in the last 40 years," said panelist Patricia Moran, an attorney with Mintz, Levin, Cohn, Ferris, Glovsky and Popeo in Boston.

"This area of compliance may have been a second thought to many HR professionals in the past, but it is now a priority," she said. "Employers that put health and welfare compliance on the back burner really do so at their peril now."

"At the Office of Enforcement we look for plans with problems that are impacting participants most directly, and we try to get those fixed," Bach said. When it's a systemic problem with the service provider, the office tries to resolve the issue for all effected plans.

Who Gets Audited?

"The most common way we find cases is through participant complaints," Bach noted. "If those complaints aren't resolved or if they point to more systemic issues, they will be referred to enforcement, and we will take a closer look."

She said the agency also receives leads from advocacy groups, and if a case is open for an employer's retirement plan, investigators may also look into its health plan.

Additionally, Form 5500 reports may spark an investigation for those plans that are required to file them.

Moran noted that media coverage of a company with financial troubles may also trigger an investigation.

"If a company is in the news for being in decline, there's a chance that it's not only dropping the ball with clients and services. It also may have problems with its benefits plans," she said.

Information Requested

At the start of an investigation, the DOL will send a letter requesting certain documents, Bach explained. Frequently requested documents include:

  • Plan documents.
  • Summary plan descriptions (SPDs).
  • Certificates of coverage.
  • Service provider documents.
  • Premium contribution payment schedules.
  • Financial documents for funded plans.
  • Claims data.

Christine Poth, an attorney with Vorys, Sater, Seymour and Pease in Columbus, Ohio, said that meeting minutes may also be requested.

Employers need to document their health plan meetings, not only to show the DOL upon request, but also as a best practice for fiduciaries to monitor their plans, she said.

She also noted that agents have recently honed in on making sure all the plan-related documents that require a signature are actually signed.

After receiving the documents, the agency will generally conduct interviews and depositions with one or two individuals who are familiar with the day-to-day operations of the plan.

Employers and their attorneys should review the scope and nature of the questions that the investigators will likely ask, Poth said. It is also important for the interviewees to only answer the actual questions asked.

"It's OK to say 'I don't know,' " she added. "These plans are complicated, and it's OK to send supplemental information later."

Common Violations

Investigators often find that participants weren't provided with the required notices or disclosures, Bach said.

"We frequently see plans that don't provide SPDs [summary plan descriptions], which is a little shocking," she added. "Even if employees don't read the SPD, they need to be given the opportunity to read it."

She added that employers should take a look at their plan documents and make sure employees are receiving a summary in a language they can easily understand.

Investigators will also look at whether a plan complies with claims-procedure rules and whether benefits are actually paid according to the plan's terms.

She offered the following tips for working through an audit:

  • Cooperate with the investigators and be sure to understand what they need.
  • Make sure any document requests are delivered in an organized and complete manner.
  • Make sure to designate individuals for deposition that are knowledgeable enough to answer the questions the investigators will ask.
  • Reach out to investigators with any questions and contact the regional office to work through any challenges with the investigation.
  • Read the benefit plan and know what's in it.


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