If the DOL Comes Knocking: Surviving a Benefits Plan Audit
Department of Labor benefits audits are document requests first. What triggers them and the file that makes them painless.
A Department of Labor benefits audit begins as a letter with a document list — and for a prepared employer, it ends as a filing exercise. For an unprepared one, each missing document is a thread that unravels into findings.
The file that ends audits early
The standard request list: plan documents and SPDs (with proof of distribution), Form 5500 filings, Section 125 document, COBRA notice procedures and samples, ACA reporting copies, and enrollment records. Employers who maintain a single benefits compliance file — updated at each renewal — answer in days and are typically done. Audit triggers include employee complaints, 5500 anomalies, and plain randomness, so “we’re small, they won’t look” isn’t a strategy. An hour per year of file hygiene is; our compliance service makes it automatic.
The compliance layer every plan carries
Offering benefits makes you a plan sponsor under ERISA, with obligations that apply regardless of company size: a plan document, a Summary Plan Description distributed to participants, fiduciary conduct, and — for larger plans — annual Form 5500 filings. ACA, COBRA, and Section 125 rules stack alongside.
None of it is difficult; all of it is mandatory, and most small employers are out of compliance somewhere without knowing it. An annual one-hour compliance review closes the gaps cheaply — which is exactly the service our compliance benefits team provides.
Continuation coverage duties
Federal COBRA applies to employers with 20+ employees, requiring election notices within strict deadlines when qualifying events end someone’s coverage; Texas state continuation extends similar rights below that threshold. Penalties for missed notices accrue daily, per beneficiary — and departures are exactly when paperwork slips.
The reliable fix is procedural: continuation notices as a standard offboarding step, or delegated to an administrator who fires them automatically. This is unglamorous work with real liability attached — the definition of something worth systematizing.
The employer mandate, condensed
At 50 full-time-equivalent employees, the ACA’s employer mandate attaches: offer minimum-value, affordable coverage to substantially all full-time employees or face per-employee penalties triggered when any full-timer takes subsidized Marketplace coverage instead.
The count is FTEs — part-time hours aggregate into equivalents — and the measurement rules for variable-hour staff are technical enough to warrant professional setup. Businesses approaching the threshold should start tracking a year before they expect to cross it; the mandate looks backward.
The administrative load, handled
A benefits program generates steady administrative work: enrollments, qualifying-event changes, terminations, carrier invoice reconciliation, employee questions, and the occasional claims fight. In most small businesses this lands on someone with a full-time job already.
Outsourced benefits administration exists precisely for this — it converts a recurring distraction into a handled function, with fewer errors and cleaner compliance. Our HR & administration service gives Houston businesses that back office without adding headcount.
Have questions about how this applies to your situation? A licensed TrueCare group benefits specialist in Houston can walk you through your options — free, and with no pressure.
Final thoughts
Whether you’re offering benefits for the first time or fixing a package that’s stopped working, the first step is the same: a census and a conversation. Explore our group benefits services or get a free review — no cost, no obligation, real numbers.