5 Most Costly Mistakes in Employee Benefits Compliance

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Employee benefits expert lists the most costly mistakes found in companies offering health insurance to their employees.

Health Insurance Reform
...the fact is that 99% of the time, it is not enough to meet ERISA's standards...

Real fines and penalties are being doled out.

William J. Grossmiller, V- an expert in corporate employee benefits consulting, provides insight into the 5 most costly mistakes in healthcare compliance that you must ensure you have down pat.

1. Failure to Maintain Required Plan Documents
Any plan that details compliance with the Employee Retirement Income Security Act (ERISA) rules such as: claims procedures, eligibility provisions and summary plan descriptions (SPDs) need to be maintained.

Many companies think they are protected by merely having insurance contracts. According to Grossmiller, the fact is that 99% of the time, it is not enough to meet ERISA’s standards for plan documents.

Penalties: If you are unable to supply documents within 30 days of a written employee request, you’ll be looking at a possible fine up to $110 a day. Summary of Benefits and Coverage (SBC) non-compliance tacks on $1,000 per participant/beneficiary!

2. Failure to Retain Related Documents
ERISA requires that employers keep them for at least 6 years. Some states have even longer statutes of limitation. This includes amendments to original plans, open enrollment materials, payrolls, bank statements, ledgers, contracts and worksheets.

Retention of documents is the employer’s obligation and responsibility, not the insurance carrier or third party administrator.

3. Failure to File Form 5500 Each Year
Required for plans with more than 100 participants. This includes, but not limited to Medical/RX, Dental, Vision, Life, Disability, Severance Plans, Employee Assistance Plans and Travel Accident Policies.

At minimum, it must contain basic information such as number of people covered under the plan, the amount of assets in the plan, the identification of plan providers, paid premiums, commissions and fees.

Penalties: A Department of Labor (DOL) deadline applies to each benefit plan. Each penalty is cumulative and there is no statute of limitations for these violations. Noncompliant plans could face up to a maximum of $1,100 per day.

4. Compliance with the Health Insurance Portability and Accountability Act of 1996 (HIPAA)
The DOL is becoming more vigilant about enforcing compliance. They began a pilot program auditing 150 randomly selected employers.

Auditors come to the company offices for 3-10 days and go over its HIPAA documentation with whomever is responsible for monitoring compliance standards under the law.

Penalties: Up to $2,500 per incident of noncompliance per standard.

5. Compliance with the Patient Protection and Affordable Care Act (PPACA)
This is a loaded item, one that is multi-faceted and requires thorough consideration from year to year. (Click here to download a free Employer Timeline to Navigate PPACA).

The passing of PPACA has required employers to become more engaged in understanding what makes a plan compliant under the new regulations.

From Summary Benefits of Coverage (SBC), required W-2 reporting to eligibility and affordability; companies need to proactively test all aspects of their plan to remain compliant and remove unnecessary liability.

Complimentary Resource: Register for employee health and welfare benefits' compliance webinars.

Utilize internal and external resources to ensure your company is not among the statistics. As stated by Winston Churchill during WWII - "He who fails to plan is planning to fail."

About William Grossmiller
William J. "Billy" Grossmiller, V is an expert in group employee benefits consulting, brokerage and administration for companies across the United States and abroad. He is supported by a team of professionals to deliver outstanding financial results for his clients.

About Crawford Advisors
A nationally recognized employee benefits consulting, brokerage and administration firm, Crawford Advisors partner with medium and large sized organizations to drive a greater return on investment. Its proprietary full-service approach delivers consulting and administrative solutions that eliminate paperwork, manage compliance risk, increase recruiting power, improve employee health and reduce health care costs.

Contact William Grossmiller for information regarding a complimentary plan analysis.

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William J. Grossmiller, V
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