Why You Should Care About Compliance

In today's competitive business landscape, offering attractive employee benefits is no longer just a perk—it's a necessity. However, as organizations strive to create compelling benefits packages, there's a crucial aspect that often gets overlooked: compliance. If you're wondering whether you should care about compliance in your employee benefits program, the answer is a resounding yes. Let's delve into why compliance matters and how it can protect both your business and your employees.

The High Stakes of Non-Compliance

First and foremost, it's essential to understand that non-compliance isn't just a minor oversight—it can have severe consequences for your organization. According to the U.S. Department of Labor, in fiscal year 2023, the Employee Benefits Security Administration (EBSA) recovered over $1.36 billion through enforcement actions. This includes $977 million restored to workers through investigations, voluntary fiduciary corrections, and informal complaint resolutions. Even more telling, EBSA closed 907 civil investigations, with 61% of these cases resulting in monetary results for plans or other corrective action.

These statistics aren't meant to scare you, but to highlight the very real risks of neglecting compliance. The fines and penalties for non-compliance can be steep, potentially causing significant financial harm to your business.

What Exactly is Compliance in Employee Benefits?

In the context of employee benefits, compliance means meeting or exceeding the legal requirements established by governing agencies for each benefit you offer. These regulations are designed to protect employees and ensure that benefits are administered fairly and effectively.

It's important to note that compliance isn't a one-time task—it's an ongoing process. Laws and regulations change frequently, and staying up-to-date is crucial for all organizations, regardless of size.

Who Needs to Follow Compliance Regulations?

The short answer? Everyone. If your organization has employees and offers benefits, you need to be aware of and follow compliance regulations. This applies to businesses of all sizes, from small startups to large corporations.

Key Areas of Compliance

Compliance in employee benefits covers a wide range of areas, including:

1. Plan Documentation: Maintaining accurate and up-to-date plan documents.
2. Reporting Requirements: Filing necessary reports with government agencies.
3. Notification Requirements: Informing employees about their benefits and any changes.
4. Deadlines: Meeting various deadlines for filings, notifications, and other requirements.
5. Conflict of Interest: Avoiding any conflicts of interest in plan administration.

The Benefits of Prioritizing Compliance

While compliance might seem like a burden, there are significant benefits to taking it seriously:

1. Avoiding Penalties: As mentioned earlier, the financial penalties for non-compliance can be severe.
2. Protecting Your Employees: Compliance ensures that your employees receive the benefits they're entitled to.
3. Maintaining Trust: Demonstrating a commitment to compliance can boost employee trust and satisfaction.
4. Competitive Advantage: A well-managed, compliant benefits program can be a key differentiator in attracting top talent.

How to Approach Compliance

Given the complexity of compliance regulations, many organizations find it beneficial to work with a third-party benefits administrator (TPA). A TPA can offer several advantages:

1. Expertise: TPAs have in-depth knowledge of compliance requirements and stay updated on changes.
2. Reduced Liability: Outsourcing to a TPA can help mitigate the risk of non-compliance.
3. Cost-Effective: While there's a cost to hiring a TPA, it can be more economical than maintaining in-house expertise and risking potential penalties.
4. Focus on Core Business: By outsourcing compliance management, you can focus more on your core business activities.

The Bottom Line

In the world of employee benefits, compliance isn't just a box to check—it's a critical aspect of protecting your business and your employees. By taking compliance seriously, you're not only avoiding potential penalties but also demonstrating your commitment to your employees' well-being.

Whether you choose to manage compliance in-house or partner with a TPA, the most important thing is to make it a priority. In doing so, you'll be better positioned to offer a robust, legally sound benefits package that serves both your organization and your employees well.

Remember, in the realm of employee benefits, ignorance isn't bliss—it's a risk. By staying informed and proactive about compliance, you're investing in the long-term success and stability of your organization. Ready to learn about Compliance Services at Ameriflex? https://myameriflex.com/products/compliance-services/?