Until recently, I directed a corporate benefits department and was responsible for complying with the legislation that affected my organization's benefits program. There were mountains of legislation, and while my staff and I were able to handle it effectively, we definitely struggled to keep abreast of everything we needed to do. Then came the law that broke the camel's back: health care reform.
The volume and magnitude of legislation that benefit professionals are responsible for complying with today, combined with the continual volatility in the employee benefits space and significant penalties for noncompliance, begs HR departments to strongly consider adding an employee benefits compliance support resource as a natural extension of their department (
For many years, benefits compliance resources have sat in the "back room" of an organization's employee benefits broker/consultant or, in other words, that room in another time zone that takes direction from its issues log.
While satisfactory in times past, the back room is no longer in the best position to provide necessary support. Your compliance resource needs to be part of, or an extension of, your HR/benefits department for three important reasons:
1. Timely information is key.
There's a good chance someone from the C-suite was at your last employee benefits meeting because they are especially interested in hearing the effects of the Patient Protection and Affordable Care Act on the organization in real time. However, even if this was not the case, it's fair to say that executive management generally requests a very quick turnaround for information and having a resource nearby who can answer that call and provide the necessary information in a timely manner is going to be more important than ever.
2. Truly understanding the organization is imperative.
It will be very important to use the services of a compliance resource that can not only assist with the technical decision-making process, but also the effects of your organization's employees and culture when recommending a course of action. The only way s/he will be able to do so is if s/he is woven into the fabric of your organization.
3. There is a self-reporting requirement for noncompliance.
Effective Jan. 1, 2010, the IRS said that if your organization fails to comply with COBRA, HIPAA and other federal group health plan mandates (including PPACA, effective on March 23, 2010), you'll be required to file an excise tax return (IRS Form 8928) and be subject to penalties. With the benefits storm brewing on a daily basis, it will be very important to have a resource in place to maintain continual compliance and ultimately minimize any chance of ending up in a self-reporting situation.
Organizations can reasonably rely on three ways to locate an appropriate front-room employee benefits compliance support resource:
1. Use the services of an employee benefits broker/consultant that offers this in-house service.
2. Hire someone to fill this role within your organization.
3. Hire a law firm.
Full-service employee benefits broker/consultants are increasingly adding this compliance resource position to their in-house support team. "Our goal is to provide our clients with knowledgeable, timely and efficient assistance to ensure that plan design, operations and transactions comply with the law from a practical, risk management perspective," says Amy Dunn, a consultant with Mercer who is part of the consulting firm's nationwide health and benefits regulatory resource group, which focuses entirely on the area of health and group legal compliance issues. "Our key philosophy is to help our clients chart a compliance path that strikes a balance between numerous legal requirements, including those imposed on client employee benefit programs, and the client's objectives based on their human resources, business and risk management strategies."
Vicki Arnold, VP of human resources at QSC Audio Products, uses the services of a benefits broker/consultant that has an onsite compliance expert. "Like all HR and benefits professionals these days, we are faced with increasingly complex benefits legislation with which we have to comply," she says. "Attempting to do this without expert advice and guidance would be impossible. As a smaller organization, adding an in-house resource is not feasible."
Currently, it is not as common for employers to hire a staff member to play the role of compliance officer for a few reasons - adding headcount may not be an option given the state of the economy, and a top-quality, full-service employee benefits broker/consultant will often have this position on staff for the organization to use freely. However, it will not be surprising to see organizations, especially larger ones, starting to hire this position in the near future.
Law firms also are in an excellent position to provide solid compliance guidance and should be used accordingly.
As a benefits professional, your job isn't going to get any easier with regard to your compliance responsibilities. In fact, it's going to become increasingly more difficult as benefit laws continue to appear and take shape. But the good news is that you can rest easy knowing that your front-room support - whether an outside broker/consultant or in-house compliance officer - is ready to protect you.
Contributing Editor Ed Bray, J.D., is director of compliance for Burnham Benefits Insurance Services. He helps corporate clients establish and maintain regulatory compliance for their health and welfare benefits plans. He can be reached at
