Employee benefit plans are a critical part of an organization’s compliance, financial health, and employee satisfaction. However, these plans require regular audits to ensure they remain effective, competitive, and legally compliant. As a benefits broker, you play a crucial role in guiding clients through this process. But how can you determine when it’s time for an audit?
1. Compliance Risks and Regulatory Changes
Benefit regulations, such as ERISA, ACA, HIPAA, and COBRA, frequently change, requiring employers to stay up to date. If plan documents, filings, and procedures haven’t been reviewed recently, clients could face penalties, lawsuits, or regulatory scrutiny. Ensuring compliance through an audit minimizes legal risks and protects both employers and employees.
SECURE 2.0 Compliance Considerations
The SECURE 2.0 Act, signed into law in 2022, was designed to expand retirement plan access, increase savings opportunities, and reduce administrative burdens for employers. Several key provisions of the act took effect in 2025, making audits more critical than ever. Brokers should ensure clients are prepared for:
Check out this blog for more information on Secure 2.0 and key changes for 2025.
2. Rising Costs Without Clear Justification
If benefits costs are climbing unexpectedly, an audit can pinpoint areas of inefficiency. Employers may be overpaying for outdated plan options, unnecessary coverage, or underutilized benefits. By analyzing spending patterns and plan usage, brokers can help clients optimize costs while maintaining competitive offerings.
3. Low Employee Engagement or Confusion
If employees frequently ask about their benefits, struggle with the enrollment process, or underutilize certain offerings, there may be communication gaps. An audit can assess whether employees fully understand and appreciate their benefits and whether additional education or improved messaging is needed to enhance engagement.
4. Workforce Changes
Significant shifts in workforce size—such as mergers, acquisitions, layoffs, or rapid expansion—can impact benefit eligibility, costs, and overall plan design. A benefits audit ensures that the plan remains aligned with the organization's current workforce needs and financial realities.
5. Issues with Claims or Carrier Discrepancies
Errors in claims processing, delays in reimbursements, and billing discrepancies can indicate administrative inefficiencies. An audit can help uncover incorrect charges, enrollment errors, or provider mismanagement, ensuring employers and employees receive the coverage and service they expect. For information on how BerniePortal has mitigated the risk of claim issues and carrier discrepancies, check out our blog on BernieBill.
6. Dependent Eligibility Verification
Covering ineligible dependents leads to unnecessary costs and compliance risks. Conducting periodic dependent eligibility audits ensures that only qualified individuals are enrolled, helping to control costs and reduce exposure to legal challenges.
7. 401(k) and Retirement Plan Fee Overpayments
Employers often overpay for retirement plan administration and investment management. Many fail to benchmark their 401(k) fees against industry averages, resulting in excessive costs. A thorough audit can uncover hidden fees and ensure that clients are receiving competitive pricing and appropriate services from their providers.
8. Knowing Which Benefit Plans Require Audits
Employers often offer multiple benefit plans, each with its own audit requirements. Brokers should help clients identify which plans require Form 5500 filings, including:
Form 5500 is an annual return/report that businesses must file with the Department of Labor (DOL), IRS, and Pension Benefit Guaranty Corporation (PBGC) to provide details on the financial condition, investments, and operations of their employee benefit plans. This form is critical for maintaining compliance with ERISA regulations. Failing to file Form 5500 accurately and on time can result in costly penalties, making it essential for brokers to assist clients in preparing and reviewing these filings.
Employers should also confirm with their brokers and administrators that all necessary forms have been completed accurately, ensuring no compliance gaps.
9. Preparing for the July 31st EBP Audit Deadline
If clients are unsure whether they can meet the July 31st deadline for employee benefit plan audits, brokers should guide them through a pre-extension checklist:Proactive planning helps clients stay on track, reducing last-minute stress and ensuring future compliance.
As a benefits broker, your expertise can guide employers through the EBP audit process, helping them stay competitive and ensuring their benefits plans deliver maximum value. By encouraging regular audits, you position yourself as a key partner in your clients’ long-term success. And, don't forget, BerniePortal is your trusted partner in this process. With BerniePortal, brokers can streamline benefits administration and provide clients with an intuitive, centralized platform to manage their plans efficiently.