DOL Stepping Up Enforcement Of PPACA Through Plan Audits: Are You Prepared?

October 11, 2013

This is part of our series of alerts intended to help guide employers and plan sponsors through their new obligations under the health care reform laws and related guidance. This alert focuses on what you should be doing today to prepare for a potential U.S. Department of Labor (DOL) audit of your health and welfare plans.  


With all of the new compliance obligations and mandates being implemented by the Affordable Care Act (ACA), keeping up with the changes and ensuring your group health plans are in compliance can be a daunting task. Now, the DOL has updated its health and welfare plan audit requests to include documentation showing compliance with ACA. As a plan sponsor, it is important that you maintain written records of the steps you have taken to comply with the ACA since September 23, 2010 in a readily accessible format such as clearly labeled electronic files, binders or CDs. 

What Specific Documentation Is the DOL Requesting?

The type of information being requested by the DOL varies depending on whether your group health plan is claiming grandfathered status. 

All Plans: The following information is generally being requested of all group health plans regardless of grandfathered status:

1. A sample notice describing enrollment opportunities relating to coverage of children up to age 26 if your plan covers dependent children (this may be part of your open enrollment materials or summary plan description);

2. A list of any participants or beneficiaries who had coverage rescinded, the reason for such rescission and a copy of the written notice that was provided 30 days in advance of the rescission of coverage (“recession” generally means the retroactive cancellation of coverage for any reason other than nonpayment of premiums); and

3. If the plan imposes or has imposed an annual or lifetime limit since September 23, 2010, documents referencing these limits for each plan year beginning on or after September 23, 2010.

Grandfathered Plans: Plans that are claiming or have ever claimed grandfathered status are also being asked to provide:

1. A copy of the grandfathered status disclosure statements required to be included in materials distributed to participants and beneficiaries that describe the benefits provided under the plan; and

2. Records documenting the terms of the plan in effect on March 23, 2010, along with any other documents necessary to verify, explain or clarify the status of the plan as a grandfathered group health plan. The ancillary documents may include cost sharing percentage or dollar amounts, contribution rates of the employer, annual and lifetime limits on benefits, and if applicable, any contract with a health insurance issuer, which were in effect on March 23, 2010 and for subsequent plan years.

Non-Grandfathered Plans: Plans not claiming grandfathered status are being asked to provide:

1. A copy of the choice of provider notice informing participants of the right to designate any participating primary care provider, physician specializing in pediatrics in the case of a child, or health care professional specializing in obstetric or gynecology in the case of women, along with a list of participants who received the disclosure notice (these maybe part of your open enrollment materials or summary plan description);

2. To the extent the plan provides hospital emergency room services, copies of documents describing coverage for such emergency services (i.e. showing that such services are available without prior authorization or higher cost sharing amounts, even for out-of-network hospitals) for each plan year on or after September 23, 2010;

3. Documents showing preventative services are covered without cost-sharing for each plan year on or after Sept. 23, 2010;

4. The plan’s internal claims and appeals procedures and external review processes (these should be part of your summary plan description);

5. Notices (if any) relating to adverse benefit determinations, the plan’s final internal adverse determination and the plan’s final external review determination; and

6. Contracts or agreements with independent review organizations (IROs) or third-party administrators providing external review.

What Steps Should I Be Taking Now To Prepare?   

In light of the increasing frequency of DOL health and welfare plan audits, plan sponsors should:

Responding to an audit does not have to cause a significant disruption to your business. The more prepared and organized you are in advance, the more efficiently and swiftly you can resolve a DOL audit and avoid penalties. 

What Should I Do If My Plan Receives An Audit Notice?

In the event your health and welfare plan is selected for audit by the DOL, you should immediately notify and engage your legal counsel. Having experienced benefits counsel available to assist in responding to the DOL inquiries, and in some cases present during interviews, will protect your interests and enable you to respond to technical questions from the DOL quickly and authoritatively. 

With a team of attorneys who are highly experienced in the individual benefits field, MLA can provide answers to questions and assistance in complying with these requirements. 

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