Employers look to their brokers to keep their benefits compliant with Internal Revenue Service (IRS) and Department of Labor (DOL) regulations.
The cost of noncompliance is huge.
If an employer goes through an audit and doesn’t have the correct benefits documents in place, they may be subject to significant fines and penalties.
- In 2014, 65% of the cases audited for compliance resulted in fines or other corrective action.
- If employers don’t meet ERISA’s requirements, fines like these may result:
- Up to $110 per day, per plan.
- Failure-to-file penalties of up to $1,000 per day, per plan.
- IRS penalties of $25 per day up to $15,000 per year.
- Individual punishments for other breaches of fiduciary responsibilities.
- Over the past 12 years, 32% of employers audited are fined over $10,000.
Most employers can’t easily create these documents but they are the ones held legally responsible, so they often look to their brokers to help solve this problem. Left on their own, employers usually rely on a carrier certificate, which is not ERISA compliant, or pay high attorney fees.
Since employers rarely have the knowledge, or time, to manage their own benefits compliance needs, help from their insurance agency is critical. Instead of outsourcing this need and not being kept in the loop about a solution when expensive vendors or law firm are used, new self-service, cost-effective tools like ThinkHR’s Benefits Compliance Suite are available. These can help brokers be the hero by providing clients the tools to keep their documents up to date and compliant without needing to seek additional assistance.
“If you drill down to the bottom of the root of the pain, compliance is the need,” says Scott Millson, Founding Principal at MillsonJames and independent HR Technology Advisor. “If you follow that root up, brokers will reach a decision point. They know their clients have this problem, so they can either say a. I don’t do any of this, which is a bad answer; b. I can hook you up with someone else who will do this; or c. I can completely handle this for you.”
A great place to start making compliance less complicated is the ThinkHR Benefits Compliance Suite. This set of tools allow brokers to create most of the important compliance documents required, making it the best solution to deal with these complex regulations. The suite includes —Wrap, POP, Section 125-Flexible Spending Account (FSA), Section 125 Dependent Care, Health Reimbursement Arrangement (HRA) and Transportations—as well as non-discrimination testing.
It also has unlimited document creation (no more 50 POP doc limit); e-signature (so clients can review and electronically sign their documents providing verification of acceptance); centralized document storage and updating (saved for up to seven years and automatically restated documents when new legislation is presented). It’s very easy to use with a wizard interface and is backed by Polsinelli Law Firm partners to ensure documents are in compliance.
“For the brokers that are control freaks, they will want a self-service tool like this,” Millson says.
Are you a control freak? Learn more about the ThinkHR Benefits Compliance Suite now.