United Benefit Advisors Insight and Analysis Blog

It’s Not a Matter of “If,” But “When” You Get Audited By the U.S. Department of Labor

By Bill Olson, VP, Marketing & Communications at United Benefit Advisors
  Jun 2, 2015 5:44:00 PM

Department of Labor AuditAs the saying goes, an ounce of prevention is worth a pound of cure, and that’s definitely the case when it comes to a health plan audit by the U.S. Department of Labor (DOL). And prevention is certainly warranted, according to Jeff Hadden, Partner at LHD Benefit Advisors (a UBA Partner Firm), because it’s not a matter of “if” you’re getting audited, but “when” you get a letter from the DOL that your company is being audited. Hadden said that 12 of their clients received DOL audits of their group health plans in the past 20 years. However, out of those 12 audits, nine of those clients went through the audit process in just the previous two years. That’s a significant increase and a harbinger that more audits are likely to come from the DOL.

So what exactly is a DOL audit? According to the DOL, the purpose of an audit is not to rehash past mistakes but to look at past events with a view toward improving future performance. Findings from an audit can be used as a basis for adjusting policies, priorities, structure or procedures in order to make operations as efficient, economical and effective as possible.

What can trigger a DOL audit? Usually it’s one of two things — either a complaint, which leads to an investigation, or it’s totally random. Regarding the former, any audit is not limited in scope to the area of the complaint. The audit may cover all aspects of plan administration, often going back several years. Michael J. Cramer, JD, Compliance Officer at Beneflex Insurance Services (a UBA Partner Firm) emphasizes that you should try to audit-proof your company as best as possible in order to minimize any issues when and if an audit does happen.

Whenever you do get that letter from the DOL informing you that you’ve been selected to be audited, the following steps should be taken:

  1. Call the DOL phone number. Call the DOL phone number listed on the letter and request an extension. If granted, this additional time is vital and should be used to your advantage to help prepare.
  2. Get specific information about the audit. Contact the auditor to ascertain specific information about the audit 
he or she is going to perform. An important question to ask is what the focus of the investigation will be.
  3. Call your attorney and your broker.

As the likelihood of an audit from the U.S. Department of Labor increases, UBA is offering new white paper that can help employers prepare:

  • Learn how to audit-proof your company
  • Avoid the worst mistake you can make
  • Conduct a mock audit
  • Get an auditor out of your office as quickly as possible

Download "Don't Roll the Dice on Department of Labor Audits" today.

Topics: DOL, Department of Labor, white papers, Jeff Hadden, Michael Cramer, Audit