So, you own a Small Business – Are you ready for an Audit??

It may seem cruel to joke about, but if you’re a small business owner, an audit to make sure that your company is in compliance with the new healthcare reform requirements can actually be beneficial. The intent of this post is to keep you informed on auditing types and requirements, and how you can properly prepare your organization.

Ask yourself this – if you have a broker, do they have your back in this process?

Pure Risk Solutions (PRS) specializes in assisting with performing self-audits, or in preparing for one that may be enforced by our Federal Government. We are a certified broker, and would love to lend a hand as an experienced extension of your Human Resources (HR) department. Please call us at (303)834-1001 with any questions you may have.

To start, here’s a breakdown of what you can do to prepare your business for a DOL audit, as well as what the government would ask to see of you to verify that you are in compliance with the new reform.

Throw an acronym out, you’d better elaborate – what is a DOL Audit?

‘DOL’ stands for the U.S. Government’s Department of Labor. While the DOL has always held the right to request an audit, with the advent of Affordable Care Act (ACA – “Obamacare”) guidelines and restrictions, requirements have been expanded accordingly. A DOL audit will not only require you to provide proof of ACA employee health plan compliance, but additional documentation as well.

This webpage does a great job of expanding upon what documentation would be required for each of your employee’s healthcare plans – grandfathered or not. It’s extensive, and a broker can easily help you to find the right information, to ensure success in the process and make it as quick as possible.

Several types of audits that the DOL could perform are:

• Compliance: Focuses on how well a business is complying with current federal, state, and local laws and regulations.
• Best Practices: Helps the organization maintain or improve a competitive advantage by comparing its practices with those of companies identified as having exceptional HR practices.
• Strategic: Emphasis is placed on strengths and weaknesses of systems and processes to determine whether they align with the HR department’s and the organization’s strategic plan.
• Function-specific: Focuses on a specific area in the HR function – this could be payroll, performance management, records retention, etc.

So what can Small Business Owners do to prepare?

First step – be proactive. Period.

A self-audit for your business will leave you feeling like you did your homework. But here’s the best part. We’ll do your homework for you. How great is that? Think of us as if we’re that nerdy kid in your calculus class (we love nerds, by the way – no disrespect), who is more than willing to crank out a few additional functions in return for a smile from you, the pretty girl, in the hallway during passing periods. Anyway – silly analogy and the fact that we’ve clearly been watching too many John Hughes movies lately aside – there are a number of key steps involved in a self-audit (all of which we specialize in).

A relatively high-level overview of these steps looks like this:

• Review of job descriptions;
• Understanding of the differences between federal and state laws to ensure that the laws are properly applied to your company’s employees;
• Confirmation that Fair Labor Standards Act (FLSA) classifications of employees are correct;
• Review of payroll records to verify that they have been kept accurately;
• Validation that policies have been applied consistently across the organization;
• Verification that all records are complete, and if not, proper methodology to resolve any inconsistencies;
• Determination of how to address any areas of concern identified in the self-audit (aka – closing the loop).

Also – obtain your company’s Summary Plan Description (SPD). SPDs are your group health insurance plan administrator’s description of your legal rights under the Employee Retirement Income Security Act (ERISA). Each SPD for an organization should be inclusive of information on co-pay, coverage of dependents, and includes circumstances under which one of your employee’s could cancel your health insurance. It’s important to remember that SPDs are not provided by your insurance carrier. You should obtain your SPD by request of an attorney or legal adviser.

Questions? Confusion? Again, here at PRS we encourage you to contact us to discuss how we can help prepare your small business for the audit process, since we know exactly what to look for to protect you. Our number again is (303)834-1001. Ask for me, Dave (Godel), or email me at dave@purerisksolutions.com.

Happy Thanksgiving to all on Thursday! Enjoy the family time, food, football, and continuous reruns of ‘Planes, Trains, and Automobiles’ (another John Hughes classic).