In 1974, in an effort to prevent pension plans from not being solvent for retirees, the government passed the Employee Retirement Income Security Act. This Act required among other things, certain reporting requirements that to this day are required for all retirement plans. Just before the Act was passed, the legislature in its wisdom added "Welfare Programs" or today's health and benefit plans. That was unexpected and in many ways unnecessary, as it placed much of the burden of certain reporting in the hands of insurance companies and employers for these programs. For many years the focus of the law remained on retirement plans and with little exception, welfare plans were ignored. In 2013 that changed with a big dollar sign attached to it... The Department of Labor decided to enforce the age-old reporting requirements for welfare plans and hired a fleet of enforcers to accomplish that. Today the DOL has thousands of new staff with the responsibility to audit employer reporting as it relates to ERISA and to assess millions of dollars in fines and penalties. These fines and penalties have always been a part of the law, so the primary difference beginning in 2013 was the actual enforcement. The DOL has projected over a billion dollars in fines and penalties in 2015 assessing $100 to $1100 per day to employers who have not met the ERISA requirements.
Many employers and agents for years depended on their benefit insurance companies to handle some of the reporting for them. The belief was that the requirement for a plan SPD (Summary Plan Description) for each plan of qualified benefits was provided by the insurance company. The problem with that assumption was that the insurance company requirements under the law were different than those of the employer and over the years they gravitated to their own requirements. This left the employer in most cases, not in compliance with that element of the law. Further, many employers and agents became complacent with reference to ERISA reporting because it wasn't being enforced, and so this situation left it easy pickings for the ERISA compliance officers to assess their penalties and fines.
Unfortunately, the ability to ignore ERISA as it relates to benefits has all changed. The DOL begins with sending a 60 question questionnaire to the plan administrator asking about their reporting. If you are one of the employers who receives this document, it would be advisable to immediately hire an attorney to help negotiate your penalty, because in all likelihood you will pay something. Even if you are the lucky one that misses the audit procedure, you still remain on the edge with non-compliance. We recommend you remedy this situation at your earliest convenience. If you agree, one choice is to hire an ERISA attorney and they can guide you through the steps to become compliant on an ongoing basis. ERISA attorneys aren't inexpensive but the fines and penalties are larger. We at Bates Insurance Group have aliened ourselves with a national firm specializing in ERISA compliance. They assist with the compliance process, create the many documents required under the law, participate in any audits and guarantee their work such that if any penalties are assessed for work done after their engagement, they will pay them.
The ACA (Affordable Care Act) has complicated this reporting matter further with it's own reporting requirements for certain employers. Those requirements are very new to all of us, but I can assure you they won't lie in waiting for 40 years before being enforced. Make a commitment today to deal with these matters and if you are feeling overwhelmed, just give Jereme, Mary, or myself a call, and we'll introduce you to what we feel is the best, most economical solution to this exposure.
