fisherphillips.com

Today’s webinar will begin shortly. We are waiting for attendees to log on.

Presented by: Lorie Maring

Phone: (404) 240-4225 Email: lmaring@fisherphillips.com

Please remember, employment law compliance depends on multiple factors – particularly those unique to each employer’s circumstances. Numerous laws, regulations, interpretations, administrative rulings, court decisions, and other authorities must be specifically evaluated in applying the topics covered by this webinar. The webinar is intended for general-information purposes only. It is not a comprehensive or all-inclusive explanation of the topics or concepts covered by the webinar.

fisherphillips.com

Are You Prepared for a Department of Labor Audit of Your Health and Welfare Benefit Plans?

Presented by: Lorie Maring

Phone: (404) 240-4225 Email: lmaring@fisherphillips.com

fisherphillips.com

AGENDA

• Overview of Department of Labor (“DOL”) Audits ― What triggers a DOL Audit ― How to respond if your plan is audited ― What the DOL reviews in an audit ― Audit process and potential outcomes

• How to Be Proactive in Preparing for an audit

fisherphillips.com

WHAT TRIGGERS A PLAN AUDIT?

• Participant complaints • Form 5500 reviews • Media reports • Private litigation

• Referrals from other agencies, advocacy groups or state insurance

• Random . . . . .

fisherphillips.com

DOL WELFARE PLAN AUDITS

FUN FACTS • No safety in (small) numbers! Employers of any size who

sponsor an ERISA welfare benefit plan can be audited by DOL • Over 72% of audits in 2013 and over 64% of audits in 2014

resulted in penalties and corrective action (including payouts and lost profits)

• Audits are increasing in scope and number • Most recent focus on MHPAEA

fisherphillips.com

DOL WELFARE PLAN AUDITS • Health Benefits Security Project was established in

2012 • Includes broad range of investigative issues such as:

― Compliance with ERISA ― Unpaid or improperly processed benefit claims ― Excessive service provider fees ― Systemic denial of promised benefits ― Criminal misconduct by plan fiduciaries or medical

providers

fisherphillips.com

• The DOL is responsible for enforcement of ERISA compliance ― 10 regional offices (CA, GA, IL, MA, MO, NY, OH, PA and TX)

• ERISA enforcement includes: ― Consolidated Omnibus Budget Reconciliation Act (COBRA) ― Health Insurance Portability and Accountability Act (HIPAA) ― Mental Health Parity Act (MHPA) ― Newborns’ and Mothers’ Health Protection Act (Newborn’s Act) ― Women’s Health and Cancer Rights Act (WHCRA) ― Title I of Genetic Information Nondiscrimination Act (GINA) ― Mental Health Parity and Addiction Equity Act (MHPAEA) ― Children’s Health Insurance Program Reauthorization Act (CHIPRA) ― Michelle’s Law ― Patient Protection and Affordable Care Act (ACA)

DOL WELFARE PLAN AUDITS

fisherphillips.com

• ERISA Enforcement includes broad range of investigative issues such as: ― Compliance with ERISA’s reporting and disclosure

requirements *ERISA has 2 basic requirements: 1) Written plan document;

and 2) a compliant SPD is provided to all plan participants. ― Compliance with ERISA’s protections for plan participants

(e.g. claims procedures) ― Unpaid or improperly processed benefit claims ― Excessive service provider fees ― Systemic denial of promised benefits ― Misconduct by plan fiduciaries

DOL WELFARE PLAN AUDITS

fisherphillips.com

HOW TO RESPOND TO AUDIT NOTICE

DON’T... • Ask questions about what

prompted the audit • Volunteer documents or

information that is not requested

• Ignore the notice

fisherphillips.com

HOW TO RESPOND TO AUDIT NOTICE DO... • Notify your legal counsel • Contact the auditor immediately and

establish a respectful and non-confrontational relationship

• Ask the auditor what the scope of the investigation will be

• Carefully inventory all records that will be made available to the auditor

• Meet with the appropriate management and staff of the company to familiarize them with the audit process

fisherphillips.com

HOW TO RESPOND TO AUDIT NOTICE DO... • Work with legal counsel to timely

produce the requested documentation

• Provide documentation in a complete and organized fashion

• Be comprehensive – explain any missing information or documentation

• Identify any known compliance problems in advance

• Determine whether violations can be corrected before issuance of a Voluntary Compliance Notice Letter to avoid the 20% statutory penalty

fisherphillips.com

DOL WELFARE PLAN AUDITS

How does it work? Step 1: DOL audit letter arrives in the mail with initial document

requests (you may request additional time) Step 2: Submission of relevant documents (coordinate with TPA/broker) Step 3: Onsite review/audit (control your space or neutral location) Step 4: Onsite interviews with fiduciaries and other persons with plan

decision-making authorities (control access) Step 5: EBSA identification of violations, or a closing letter if no

violations are found. Step 6: Voluntary Compliance Letter Step 7: Correction Period Step 8: Closing letter

fisherphillips.com

DOCUMENT PRODUCTION TO DOL

• No “one size fits all” • Document requests may vary

by auditor • DOL may seek compliance

information from TPA or insurer using subpoena power

• Record retention and organization is essential

• Key to ERISA compliance? • DOCUMENT, DOCUMENT,

DOCUMENT!!!!!

fisherphillips.com

ERISA DOCUMENT REQUEST INCLUDES … • Plan documents, Insurance policies and Riders • Service provider agreements • Summary Plan Descriptions (“SPDs”), Benefit Booklets, and/or

Wrap Document including any amendments and/or riders showing changes in Plan benefits and entitlement to benefits for plan years beginning on or after March 23, 2010

• Signed copies of all Forms 5500 for the last 2-3 years including Schedules, auditors’ reports, and any other data to support Form 5500 entries

• Plan financial statements, cancelled checks, payroll records • Trustee/corporate minutes • Summary annual reports (“SARs”)

fisherphillips.com

ERISA DOCUMENT REQUEST INCLUDES....

• If self-funded, all contracts for claims processing, administrative services and reinsurance, actuarial analysis showing feasibility of self-funding by employer

• Copies of all required notices, including lists and logs of issued notices and a description of procedures for distribution

• Participant records, provider agreements, and fiduciary bonds • Employee handbooks discussing employee benefits • New hire and open enrollment documentation including a Sample

blank enrollment form given to participants and/or beneficiaries to complete for coverage

• Names, home address, phone numbers, email addresses and Social Security Numbers of all Plan Trustees, Plan Administrators and named fiduciaries

fisherphillips.com

HIPAA DOCUMENT REQUEST....

• Under HIPAA ― Copy of the Plan’s rules for eligibility to enroll under the terms of

the Plan (including eligibility) ― Copy of the special enrollment rights notice(s) provided to

employees, including any lists or logs an administrator may keep of issued notices

― If the Plan is in a state with a CHIP or Medicaid program that provided for premium assistance for group health plan coverage, a copy of the Employer CHIP Notice provided to employees

― Material describing any wellness programs or disease management programs offered by the plan, including rewards based on a health factor and Notice of “reasonable alternative standards” (GINA compliance evaluated in wellness also)

fisherphillips.com

HIPAA DOCUMENT REQUEST....

• Under HIPAA Portability ― Copy of the Plan’s rules for eligibility to enroll under the

terms of the Plan (including eligibility) ― Copy of the special enrollment rights notice(s) provided to

employees, including any lists or logs an administrator may keep of issued notices

― If the Plan is in a state with a CHIP or Medicaid program that provided for premium assistance for group health plan coverage, a copy of the Employer CHIP Notice provided to employees

fisherphillips.com

ACA DOCUMENT REQUEST ...

• Under ACA (regardless of whether the plan is claiming grandfather status) ― A sample written notice describing enrollment opportunities relating to

dependent coverage of children to age 26 if the Plan provides dependent coverage

― List of participants or beneficiaries whose coverage has been rescinded, reason for the rescission, and a copy of the written notice of rescission providing 30-days advance notice of any rescission of coverage

― Documents showing the limits applicable for each Plan year on or after September 23, 2010 if the Plan imposes a lifetime limit or has imposed a lifetime limit at any point since September 23, 2010

― Documents showing limits applicable each Plan year on or after September 23, 2010 if the Plan imposes an annual limit or has imposed an annual limit at any point since September 23, 2010.

fisherphillips.com

ACA DOCUMENT REQUEST ....

• Under ACA if the Plan is claiming or has claimed grandfathered health plan status within the meaning of Section 1251 of the Affordable Care Act ― Copy of the grandfathered health plan status disclosure

statement that was required to be included in plan materials provided to participants and beneficiaries describing the benefits provided under the Plan

― Records necessary to verify, explain or clarify status as a grandfathered health plan which may include documents showing Plan terms in effect on March 23, 2010 , changes toward cost-sharing provisions, changes to contributions towards cost of coverage, and change in health insurance issuers since March 23, 2010

fisherphillips.com

MHPAEA DOCUMENT REQUEST ….

• Under MHPAEA, plan sponsors must ensure that any financial or treatment limitations on benefits under a group health plan are not more stringently applied to mental health and substance use disorder benefits than to medical/surgical benefits.

• How plan sponsors can gauge compliance ― Use plan-specific data when making compliance

projections ― Review the plans’ nonquantitative treatment

limitations (“NQTLs”) • Not an objective standard – must analyze claims paid

fisherphillips.com

MHPAEA DOCUMENT REQUEST • Examples of MHPAEA Violations

― Not offering out-of-network providers or inpatient benefits to treat mental health or substance use disorders

― Charging higher copays ― Use plan-specific data when making compliance projections ― Imposing broad preauthorization requirements on all mental health

and substance use disorder treatments ― Use plan-specific data when making compliance projections ― Requiring written treatment plans for mental health services

fisherphillips.com

MHPAEA DOCUMENT REQUEST • Under MHPAEA

― Documents relating to any analyses the Plan has done regarding testing the parity of the non-quantitative treatment limitations or the quantitative treatment limitations when compared to the medical/surgical limitations

― Breakdown of medical surgical claims paid showing the amount of medical surgical claims paid for each co-payment level applicable under the Plan for each plan year that the Plan covers mental health and/or substance abuse

fisherphillips.com

GINA DOCUMENT REQUEST • Title I generally prohibits group health plans

from: • Adjusting premium or contributions amounts based

on genetic information; • Requesting/requiring genetic testing; • Requesting/requiring/purchasing genetic information

for underwriting purposes or in connection with open enrollment.

• No HRA during open enrollment or after if reward tied to premiums (considered underwriting)

• DOL does not audit EEOC wellness rules, but may refer violations

fisherphillips.com

OTHER DOCUMENT REQUESTS • Under NMHPA

― Newborns’ Act: lists or logs of distributed notices ― Plan’s rules regarding pre-authorization for a

hospital length of stay in connection with childbirth • Under COBRA ― Sample notices, all election packages mailed, copies of elections, length of coverage and premium payment records • Under WHCRA

― Sample notice and distribution logs

fisherphillips.com

WHEN THE DOL IS IN THE HOUSE

fisherphillips.com

ON-SITE AUDIT PROTOCOLS • Determine who will be interviewed

― Familiar with plan documents and plan operation ― Prepared to address compliance issues and/or corrective

measures • Arrange to have legal counsel present • Designate an appropriate location

― Provide comfortable, usable workspace ― Avoid high traffic areas ― Have all documents produced readily accessible

• Informal interview (not recorded or videotaped) • DOL will ask series of questions until he has covered his agenda

fisherphillips.com

POSSIBLE AUDIT OUTCOMES • No action – Closing Letter

― No ERISA violations found ― Violations cited, however, DOL does not deem the case fit for further action ― Violations cited, however no damages or de minimis damages ― Violations cited and corrected (following receipt of a Voluntary Compliance

Letter)

• Corrective Measures Required ― Voluntary Compliance Letter issued ― 10 days to respond ― Proof of correction must be submitted ― Can take up to a couple months for processing

• Litigation

fisherphillips.com

TIPS FOR BEING AUDIT READY

Compliance Compliance Compliance

fisherphillips.com

TIPS FOR BEING “AUDIT READY” • Identify an individual to coordinate compliance efforts

• Identify all group plans subject to compliance concerns

• Routinely conduct self-audits and correct failures

• Retain documentation and procedures that support compliance measures

• Maintain compliance documents in a central location

• Respond to participant questions and requests on a timely basis

• File Form 5500s timely and accurately (key trigger is a retirement plan with over 100 participants and no welfare 5500)

• Distribute required participant notices timely and keep records of distribution

fisherphillips.com

TIPS FOR BEING “AUDIT READY” • Make timely updates to plan document and SPDs to reflect legal and design

changes • Confirm that vendors are following contract terms and administering plans in

compliance with federal and other requirements • Require vendors to immediately report instances of potential noncompliance

to plan • Train applicable staff on compliance obligations and procedures to address

violations • Work with legal counsel to minimize or correct any potential violations • Respond promptly and thoroughly to any governmental inquiry related to

health and welfare plans

fisherphillips.com

IMPORTANCE OF SELF-AUDITS

• Can demonstrate a good faith commitment to compliance if the plan is audited by the DOL

• Conducting self-audits grant employers a readiness to respond to participant information requests

• The goal of most self-audits is to identify and correct any compliance problems in advance

• Many available resources for self-auditing on DOL/EBSA website • https://www.dol.gov/agencies/ebsa/employers-and-advisers/plan-administration-

and-compliance/health-plans • https://www.dol.gov/sites/default/files/ebsa/about-ebsa/our-activities/resource-

center/publications/cagappa.pdf • https://www.dol.gov/sites/default/files/ebsa/about-ebsa/our-activities/resource-

center/publications/rdguide.pdf

fisherphillips.com

BEING PROACTIVE IS VITAL!

SELF-AUDITS HELP TO BRING POTENTIAL PROBLEMS TO LIGHT AND CAN BE ADDRESSED BEFORE A DOL AUDIT.

Please refer to the UBA White Paper at

http://www.ubabenefits.com/wisdom/white-papers

for further guidance on how to prepare for a DOL audit.

fisherphillips.com

Continuing Education Credit

HRCI –

SHRM –

fisherphillips.com

Final Questions Email: ubamember@fisherphillips.com

Presented by: Lorie Maring

Phone: (404) 240-4225 Email: lmaring@fisherphillips.com

fisherphillips.com

Thank You

Presented by: Lorie Maring

Phone: (404) 240-4225 Email: lmaring@fisherphillips.com