SHRM26 Debrief · Compensation & Benefits · #2092

ACA and ERISA Compliance: 11 Steps to Avoid (or Survive) a DOL Audit

with Gary Kushner

▶ Watch on the SHRM portal ~57 min, distilled

ERISAACADOL audits

"The Employee Retirement Income Security Act, otherwise known as the Every Ridiculous Idea Since Adam Act."

What it was about

Employers can dramatically reduce their risk in a DOL or IRS audit by building basic compliance infrastructure now: plan documents, notice-distribution proof, measurement periods, and correct filings. That beats scrambling to fix gaps after an audit letter arrives.

By the numbers

$2,000 per employee (started), now a little over $4,000 per employee

ACA 'A' penalty (4980H) for not offering coverage to 95%+ of full-time employees, inflated over 16 years

about a third of the time

Rate at which litigation has favored plaintiffs arguing employers 'sponsor' voluntary plans by selecting/excluding carriers

$110 per day per person

ERISA penalty for failure to provide required notices when requested

Key notes

Create a contemporaneous record (an Excel or Word log) every time you distribute an SPD, SBC, or required notice, since DOL will ask for proof of distribution during an audit.
If you're an applicable large employer (50+ full-time equivalents), confirm your plan clears all three ACA hurdles: minimum essential coverage, minimum value (60%+ actuarial value), and affordability (employee-only coverage capped near $130/month under the federal poverty level safe harbor for 2026).
Set up a 12-month measurement period (not tied to the calendar year) to determine which variable-hour employees average 30+ hours a week and are therefore full-time equivalents eligible for coverage.

The contrarian takeSome employers reason that paying the smaller ACA 'B' penalty (a few thousand dollars per employee) is cheaper than providing affordable single coverage. The speaker argues this is actually a bad deal: it invites recurring annual IRS scrutiny instead of a one-time cost.

Take this back Monday

Do this for your team

Start a dated log of every SPD, SBC, and notice you distribute this year. DOL will demand proof of distribution in an audit.

Say this in your next leadership meeting

Compliance risk isn't the audit letter itself — it's whether we can prove, on paper, that we distributed every required notice.

Watch out for

Never updating ancillary SPDs (like life insurance/AD&D) because the plan itself doesn't change often, even though ERISA requires restatement every 5-10 years.
Failing to send initial COBRA notices, which never starts the 60-day election clock and can expose the employer to claims and premiums going back years.
Treating a discriminatory life insurance benefit design (tiered by job level) as compliant when only flat-dollar or comp-multiple designs pass non-discrimination rules.

Fun fact · Gary Kushner

Gary Kushner has advised four U.S. Presidents on health care and testified before numerous Congressional committees on employee benefits.

If this landed, see these

↳ Go deeperFuture Proofing Your Health Benefits: A Panel Discussion on Multi Year Planning and High Performance Program DesignFiduciary governance turns basic compliance paperwork into active plan management that also cuts costs.⇄ The counterpointThe Hidden Cost of Pharmacy Benefits: How HR Leaders Can Unlock 30–40% Savings Without Disrupting Employee CareArgues real savings hide in PBM contract terms, not audit-proofing paperwork.✦ The unexpected oneRaid Readiness: Preparing Your Workforce for ICE Worksite ActionsSame readiness muscle: a designated point person and protocol turns any regulator visit routine.