The document outlines essential steps and obligations for maintaining compliance with benefits plans, focusing on fiduciary responsibilities, plan audits, and record retention requirements. It discusses the roles of various regulatory bodies that may initiate audits, such as the Department of Labor and the IRS, along with detailed guidelines on disclosures, corrections for plan violations, and electronic compliance. Employers are encouraged to perform internal audits, collaborate with legal counsel during external audits, and ensure proper documentation to adhere to legal standards.

1. Audit Alert:
JUNE 21, 2016
A CBIZ Benefits & Insurance Services Program
How to Keep Your Benefits Plans in Good Order

2. Today’s Speaker
2
KAREN R. MCLEESE, ESQ.
VICE PRESIDENT - REGULATORY AFFAIRS
CBIZ BENEFITS & INSURANCE
SERVICES, INC.
Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016

3. Today’s Agenda
3
 Sources of Plan Audits
 Plan Fiduciary Obligations
 Plan Administration
 Disclosures
 Record Retention
 Reporting
 Updated Worksite Postings
 Appendix
 Welfare and Retirement Plan Disclosures
 Government Compliance Tools
Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016

4. Who Initiates Audits?
4
U. S. Department of Labor
 Employee Benefits Security Administration (EBSA): Welfare benefit
plans including Affordable Care Act (ACA) compliance and
retirement plans subject to ERISA
 Wage & Hour Division: Compliance with Family and Medical Leave
Act (FMLA) and Fair Labor Standards Act
Internal Revenue Service (IRS) and U.S. Department of
Treasury
 Welfare benefit plans, including ACA compliance and retirement
plans
 Independent Contractor vs. Employee
Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016

5. Who Initiates Audits?
5
U. S. Department of Health and Human Services (HHS)
 Health plans including ACA compliance
 HIPAA Administrative Simplification Rules (Privacy, Security and
Breach); also enforced by U.S. Department of Justice and State
Attorneys Generals
Other federal and state government agencies regulating
employment matters
Self-audit, internal or external
Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016

6.  Internal review and analysis of plan filings by governing
agency(ies)
 Outside sources such as HHS, state insurance
department, industry journals or newspapers, patient
advocacy groups, private litigation, etc.
 Complaints filed by participants and beneficiaries
What Triggers an Audit?
6 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016

7. Who Is a Plan Fiduciary?
 Named Fiduciary
 Designated in Plan Document
 Authority to Manage Plan
 Types of Named Fiduciaries
• Entity/Corporation
• Named Position
• Specific Individual
Fiduciary by Action
 Anyone who exercises control by virtue of actions and relationship to
plan, such as investment manager, plan consultant, attorney, accountant
 Final investment advice regulations (issued April 8, 2016) defines
fiduciary as one who receives compensation for providing individualized
or specifically directed advice to retirement plan sponsors, plan
participants or Individual Retirement Account (IRA) owners
7 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016

8. Who Is a Plan Fiduciary?
1. Has discretionary authority or control over management of the plan
and plan assets
2. Acts solely in the best interest of plan participants and beneficiaries
3. Has duty of undivided loyalty
4. Uses plan assets for the exclusive purpose of:
 Providing benefits for participants and beneficiaries; and
 Paying reasonable expenses of plan administration (settlor vs.
plan expenses)
5. Acts with care, skills, prudence and diligence as a prudent person
would in a similar circumstance
6. Diversifies investments (if applicable)
7. Follows the terms of the plan (unless inconsistent with the law)
8 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016

9. Fiduciary Obligations - Plan Operations
1. Make certain:
 Written plan documentation is clear and communicated;
 Plans are operated in accordance with their terms for the
exclusive benefit of participants and beneficiaries; and
 Various discrimination rules applicable to all plans are
satisfied
2. Ensure employee contributions are timely deposited
3. Use diligent processes for hiring and monitoring of service providers
4. Determine whether fees and expenses are reasonable, and
determine which ones can be paid by plan
5. Monitor the plan’s benefit and claims procedures
9 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016

10. Fiduciary Obligations - Plan Disclosures
Disclosure obligations applicable to all welfare and retirement
plans subject to ERISA:
1. Summary Plan Description (SPD): Detailed summary of plan
provisions relating to eligibility, benefits, plan operations,
funding, claims procedures, and Statement of ERISA Rights
2. Summary of Material Modification (SMM)
3. Notice of Material Reduction in Benefits (health plans only)
4. Summary Annual Report (SAR)(if applicable)
See Appendix for additional types of notices required to be disclosed by
welfare and retirement plans to plan participants
10 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016

11. Electronic Disclosure of Required Documents
 All ERISA Title I disclosure documents (SPD,
SMM, SAR, etc.) can be distributed electronically
to both participants and beneficiaries
 IRS/Treasury have different electronic disclosure
rules depending on document; most require
affirmative consent
11 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016

12. DOL Electronic Disclosure Requirements
 Individuals with employment-based access to employer’s electronic
system:
1.Must have access to computer and network; and
2.Plan administrator must ensure receipt of the document
 Individuals without employment-based access to employer’s
electronic system must:
1. Give written consent to the electronic disclosure;
2. Provide his/her email address; and
3. Be given applicable hardware and software requirements necessary to
access the electronic disclosure.
 All electronic disclosures must provide a clear statement that a paper
copy of the document can be requested
 Critical distinction between furnishing documents vs. making
documents available and posting on internal or external website
12 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016

13. Fiduciary Obligations - Correcting Plan Violations
DOL Programs
 Voluntary Fiduciary Correction Program (VFCP)
encourages employers to comply with ERISA by
voluntarily self-correcting certain violations
 Delinquent Filer Voluntary Compliance Program
(DFVCP) assists late or non-filers of the Form 5500 in
coming up to date with corrected filings
13 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016

14. Fiduciary Obligations - Correcting Plan Violations
IRS Programs
 Welfare benefit plan violations must be self-reported
on Form 8928
 Retirement plan violations processed via Employee
Plans Compliance Resolution System (EPCRS):
 Self-Correction Program (SCP)
 Voluntary Correction Program (VCP)
 Audit Closing Agreement Program (Audit CAP)
14 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016

15. Fiduciary Obligations - Record Retention for
Benefit Plans
General rule of thumb: Keep records for 8 to 10 years
 ERISA and HIPAA: 6 years from last date record used
 Equal Employment Opportunity Commission (EEOC)
and state laws may have different employment-related
document retention requirements
 Some records must be kept longer, i.e., the life of the
participant
 Both Internal Revenue Code and ERISA provide for
electronic maintenance of records
15 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016

16. Fiduciary Obligations - Plan Reporting
 Welfare and Retirement Benefit Plans subject to ERISA
Form 5500
 Welfare Benefit Plans (if applicable)
 Forms 1094 and 1095
 Multiple Employer Welfare Arrangement: Form M-1 and Form
5500
 Medicare Part D: Disclosure to CMS
 Form W-2
 Dependent care assistance program
 Aggregate cost of health care coverage
 Health Savings Account (HSA) contributions
 Disability income
 Group term life insurance
16 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016

17. HIPAA Privacy, Security and Breach Audits
Administrative Simplification Rules enacted by the Health Insurance
Portability and Accountability Act (HIPAA), as amended by Health
Information Technology for Economic and Clinical Health
(HITECH) Act
These laws require protection of individually identifiable health
information (PHI) by covered entities, defined as:
 Health Care Providers
 Health Care Clearinghouses
 Health Plans – both fully insured and self-funded plans
 Business Associates
17 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016

18. HIPAA Privacy, Security and Breach Audits
HHS Office of Civil Rights (OCR) required to conduct
periodic audits of covered entities to ensure
compliance with laws and appropriate safeguards in
place to protect and secure PHI.
 Phase 2 Audits currently underway
These rules will be more fully discussed in upcoming
CBIZ B&I Webinar on Sept. 20, 2016:
Protecting Employee Personal Information: Know the
Right Thing To Do
18 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016

19. Updated Workplace Postings
 Equal Employment Opportunity Commission (EEOC) enforces
Title VII and related employment-based discrimination laws
 Penalty for failure to post the “Equal Employment Opportunity
is the Law” posting in all affected work places has increased
from $210 to $525 per violation
 FMLA covered employers (50+ employees) required to post a
general notice of FMLA information in their worksite locations
 DOL updated a worksite poster that can be used to notify
employees of their FMLA rights and protections
19 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016

20. Know Your Workforce
 Employee vs. Independent Contractor
 Exempt vs. Nonexempt
20 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016

21. Types of Documents Reviewed in Audit
 All plan documents, including related documents
 All meeting minutes relating to the plan
 All service contracts including fee schedules
 All expenses paid by plan
 All documents showing participant contributions
 All employment policies applicable to plan or policy
 Proof of bond (if applicable)
 All required reports and related audits to government
 All required disclosure notices for COBRA, HIPAA, ACA, mental
health parity laws, wellness programs, etc. (see Appendix)
21 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016

22.  Consider performing periodic internal audits of all plan
documents and related disclosures and internal
policies, processes and procedures to ensure
compliance with all applicable laws
 Establish ongoing protocols for reviewing and
maintaining practices and procedures to ensure
compliance with all applicable laws
What Should an Employer Do?
22 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016

23. If an outside audit request is received:
1. Make the audit request a high priority
2. Engage legal counsel immediately
3. Create a positive cooperative relationship
4. Assign a point person and coordinate with all
players
5. Brief management on relevant issues
6. Respond timely to all requests
7. Don’t panic
What Should an Employer Do?
23 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016

24. QUESTIONS?
The information contained herein is not intended to be legal, accounting, or other
professional advice, nor are these comments directed to specific situations. The
information contained herein is provided as general guidance and may be affected by
changes in law or regulation. The information contained herein is not intended to replace
or substitute for accounting or other professional advice. Attorneys or tax advisors must
be consulted for assistance in specific situations.
This information is provided as-is, with no warranties of any kind. CBIZ shall not be liable
for any damages whatsoever in connection with its use and assumes no obligation to
inform the reader of any changes in laws or other factors that could affect the information
contained herein.
24 Audit Alert:
How to Keep Your Benefits Plans in Good Order
June 21, 2016

25. APPENDIX
 Welfare and Retirement Plan Disclosures
 Government Compliance Tools
25 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016

26. All Welfare and Retirement Plans Subject to ERISA
1. Summary Plan Description (SPD): Detailed summary of
plan provisions relating to eligibility, benefits, plan
operations, funding, claims procedures, and Statement of
ERISA Rights
2. Summary of Material Modification (SMM)
3. Notice of Material Reduction in Benefits (health plans
only)
4. Summary Annual Report (SAR)(if applicable)
26 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016

27. Additional Welfare Benefit Plan Disclosures
 ACA Required Disclosures
 Summary of Benefits and Coverage (SBC)
 Notice of Marketplace Options
 Notice of Grandfathered Health Plan Status (if applicable)
 Benefit Statements: Form 1095-C or Form1095-B
 Extension of Dependent Coverage to Age 26
 Primary Care Physician (PCP) Designation
 Right to Direct Access to OB/GYN Providers Without Prior Authorization or
PCP Referral
 Coverage of Out-of-Network Emergency Services
 Coverage of Preventive Services
 30-day Advanced Notice of Rescission of Coverage
 60-day Advanced Notice of Material Modification in Benefits
27 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016

28. Additional Welfare Benefit Plan Disclosures
 Claims, Appeals & External Review Documentation (ERISA
and ACA)
 COBRA Notices:
 Initial (General) COBRA Notice
 Election Notice
 Notice of Ineligibility
 Notice of Early COBRA Termination
 Conversion Notice
 Continuation Rights for Students on Medical Leave
(“Michelle's Law”)
 Initial and Annual Women’s Health and Cancer Rights Act
Notice
28 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016

29. Additional Welfare Benefit Plan Disclosures
 Newborns’ and Mothers’ Health Protection Act Notice
 HIPAA Waiver of Coverage and Notice of Special Enrollment
Rights
 HIPAA Notice of Privacy Practices and Triennial Reminder
Notice
 Medicare Part D – Notice of Creditable Coverage
 Medicaid/Children’s Health Insurance Program (CHIP)
Premium Assistance Notice
 Qualified Medical Child Support Order (QMCSO) Notice
29 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016

30. Retirement Plan Disclosures
Participant-Level Fee Disclosure
Disclosure of plan-related and investment-related information to
participants from plan administrator
1. Plan-related disclosures must be provided annually, prior to individual’s
ability to make an investment, including individual and plan-related
administrative fees and/or expenses
2. Provide investment-related information identifying performance and
benchmarking data together with fees and expenses in comparative
format
30 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016

31. Retirement Plan Disclosures
Participant-Level Fee Disclosure, continued
3. Subsequent disclosures required:
 Changes to plan information and quarterly disclosures of actual
charges or deductions
 Ongoing disclosures, such as voting, tender, or similar investment-
related documentation, prospectuses, financial statements,
shareholder reports
31 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016

32. Other Retirement Plan Disclosures
 Automatic Deferral: Annual written notice of automatic
deferral and investment provisions
 Benefit Statement: Written quarterly statements of account
balances and investments for participant-directed plans
 Black-out Notice: 30-day advance written notice of
temporary restriction on normal right to direct and diversify
investments
 Default Investment: Annual written notice describing
participants' rights and obligations with respect to default
investments
32 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016

33. Other Retirement Plan Disclosures
 Deferral Elections: Provide participants with an effective
opportunity to make or change deferral elections at least
once a year
 Distribution Notice and Consent
 Diversification Notice for Employer Stock
 Qualified Domestic Relations Order (QDRO) Notice
 Rollover Notice
 Safe Harbor Plan Notice
33 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016

34. EBSA Compliance Assistance Tools
Compliance Assistance Web Page:
http://www.dol.gov/ebsa/compliance_assistance.html
Health Benefit Plan Self-Compliance Tools:
 HIPAA & Other Health Care-Related Provisions Tool
http://www.dol.gov/ebsa/pdf/part7-1.pdf
 Affordable Care Act Provisions Tool
http://www.dol.gov/ebsa/pdf/part7-2.pdf
34 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016

35. EBSA Compliance Assistance Tools
Fiduciary Education Campaign for Health Plan and
Retirement Plan Sponsors Web Page
(http://www.dol.gov/ebsa/fiduciaryeducation.html)
 Live Seminars
 Webcasts: Getting It Right - Know Your Fiduciary
Responsibilities
 Publications
 ERISA Fiduciary Adviser
35 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016

36. EBSA Compliance Assistance Tools
Correction Programs
(http://www.dol.gov/ebsa/compliance_assistance.html#section8)
 Voluntary Fiduciary Correction Program (VFCP) encourages
employers to comply with ERISA by voluntarily self-
correcting certain violations
 Delinquent Filer Voluntary Compliance Program (DFVCP)
assists late or non-filers of the Form 5500 in coming up to
date with corrected filings
36 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016

37. IRS Compliance Assistance Tools
Self-Reporting – Welfare Benefit Plan Violations
Failure to comply with certain federal laws must be self-reported to IRS on Form 8928
Includes violations relating to:
 COBRA continuation coverage provisions
 Certain ACA provisions including insurance market reforms and claims, appeals and external review
processes
 HIPAA portability, access and renewability provisions
 Genetic Information Nondiscrimination Act of 2008 (GINA) - prohibits discrimination based on a
health factor, including genetic information
 Mental Health Parity Act and the Paul Wellstone and Pete Domenici Mental Health Parity and
Addiction Equity Act of 2008 (requires parity between mental health benefits and medical/surgical
benefits)
 Mothers' and Newborns’ Health Protection Act (requires minimum hospital lengths of stay in
connection with childbirth)
 “Michelle’s Law” (requires continued coverage for post-secondary students with a serious medical
condition)
 Comparable employer contributions to Archer MSAs
 Comparable employer contributions to Health Savings Accounts
37 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016

38. IRS Compliance Assistance Tools
Self-reporting welfare benefit plan violations, continued
 Entity reporting on Form 8928: Employer/plan sponsor of group health
plan, insurers, third-party administrators (TPAs)
 Penalty for failure to comply with laws: Excise tax of $100 per day/per
affected individual
 Failure to self-report can result in additional penalties (up to 25% of tax
due plus interest)
IRS Web Page: Affordable Care Act Tax Provisions for Employers
(http://www.irs.gov/Affordable-Care-Act/Employers)
 Small Business Health Care Tax Credit
 Employer Shared Responsibility Provision
 Information Reporting by Applicable Large Employers and Insurers
38 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016

39. IRS Compliance Assistance Tools
Retirement Plan Sponsors
(http://www.irs.gov/retirement-plans)
Reporting and Disclosure Guides
Phone Forums and Webinars
Fix-it Guides - to find, fix and avoid mistakes in 401(k) plans, 403(b)
plans, Salary Reduction Simplified Employee Pension Plans
Dedicated IRS Web Page for “Correcting Plan Errors”
(http://www.irs.gov/Retirement-Plans/Correcting-Plan-Errors)
Includes information about the Employee Plans Compliance Resolution
System (EPCRS) programs:
 Self-Correction Program (SCP)
 Voluntary Correction Program (VCP)
 Audit Closing Agreement Program (Audit CAP)
39 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016

40. HIPAA Privacy, Security and Breach Audits
OCR’s Audit Protocol
(http://www.hhs.gov/hipaa/for-professionals/compliance-
enforcement/audit/protocol/)
Tool outlining types of information and procedures reviewed during audit
to substantiate compliance by covered entity relating to:
 Notice of privacy practices
 Individual rights
 Use and disclosure of PHI
 Business associate agreements
 Amending PHI and accounting of disclosures
40 Audit Alert: How to Keep Your Benefits Plans in Good Order June 21, 2016