Nobody is perfect and mistakes can happen, especially when navigating the complex landscape of benefits compliance. However, when errors occur, it’s essential to promptly identify and rectify them to minimize potential penalties and ensure the wellbeing of your employees. In this post, we’ll highlight some common compliance errors and offer guidance on how to correct them.
Mistake #1: Missing Required Notices
Employers are required by various laws to provide certain notices to employees, such as the Summary of Benefits and Coverage (SBC) or the COBRA General Notice. If these notices are missing or delayed, it could lead to hefty fines.
Correction: First, immediately provide the necessary notices to the affected employees. Going forward, implement a system to track when and how notices were distributed to ensure you meet your obligations. Document all efforts to correct the error and any changes made to your procedures.
Mistake #2: Misclassifying Employees
Misclassification of employees, such as treating a full-time employee as part-time or considering an employee an independent contractor, can result in compliance issues, including failing to offer appropriate health coverage.
Correction: Review and update your employee classifications. If misclassification has occurred, correct the status and extend any necessary benefits to the employee. Be sure to document your actions and make any necessary amendments to your ACA reporting.
Mistake #3: Incorrect Measurement Periods
Under the ACA, applicable large employers (ALEs) are required to use “measurement periods” to determine which employees are considered full-time and therefore must be offered coverage. If these periods are calculated incorrectly, it can lead to compliance issues.
Correction: Identify and correct any miscalculations. Moving forward, verify that your measurement periods align with ACA requirements, and consider implementing a tracking system to help manage these periods more effectively.
Mistake #4: Failure to Deposit Employee Contributions Timely
Under ERISA, employers are required to deposit employee contributions to a health plan as soon as they can be reasonably segregated from the employer’s general assets. Failure to do this timely can result in penalties.
Correction: If you discover late deposits, correct them immediately and document your actions. Review your processes to identify why the delay occurred and implement changes to ensure timely deposits in the future.
Mistake #5: Inadequate or Missing Plan Documents or SPDs
Employers are required to maintain and distribute detailed plan documents and Summary Plan Descriptions (SPDs). Failure to do so can lead to penalties.
Correction: If you discover that your plan documents or SPDs are inadequate or missing, work with a benefits attorney to create or update these documents. Once ready, distribute them to plan participants and beneficiaries.
Remember: Prevention is Key
While it’s important to know how to correct common compliance errors, the best approach is to prevent them from happening in the first place. Regularly review your benefits program to ensure compliance, seek expert advice when necessary, and utilize resources such as Comply DIY to assist in managing your compliance tasks. With the right tools and procedures, you can navigate the complex world of benefits compliance with confidence.
