As a contractor required to comply with the strict guidelines of the Service Contract Act (SCA), it is imperative that you partner with a broker who has industry expertise. Your health and welfare plans are highly scrutinized and frequently audited by the federal government. The results of implementing plans with an inexperienced broker could be devastating – resulting in failed audits, fines, or even worse: debarment.
Throughout my almost 10 years in the industry, I have had the opportunity to observe non-compliant plans and work with contractors to develop new strategies that surpass the strict enforcement guidelines of the federal government. Here are a few observations I’ve witnessed throughout my career, along with some recommendations for how to make your plans stronger, more effective, and compliant with DOL guidelines:
Non-compliant plans are often the result of:
- Ineffective or inefficient employee communications
- Implementing coverage and plans that are unnecessary, too expensive, or plans that employees do not understand and therefore do not utilize
- Partnering with a broker or TPA that is not looking out for the best interest of the client and employees
Common compliance mistakes:
- Incorrect or incomplete notifications in new hire packets, employer handbooks, and mandatory office postings
- Misfiled 5500s
- Using a broker or advisor that lacks specific knowledge of the Service Contract Act and its provisions as they pertain to bono fide benefit plans resulting in non-compliant plans
- If self-funded, using a broker that is unfamiliar with the dynamics of the plans and does not have internal underwriters or the ability to produce funding forecasts and properly determine the necessity of establishing a trust
- Relying entirely on renewals and data analytics provided by the insurance companies, without partnering with a broker that has the capabilities to utilize in-house risk managers, underwriters, and compliance staff. Negotiations are stronger and more meaningful with insurance companies when you are utilizing facts, data, and analyses completed internally.
- Partner with a broker that is committed to providing cutting edge technology and resources to distribute information to your employees
- Hold your partners, consultants, and advisors accountable for services they assert to provide
- Ensure you have access to the best national partners – insurance companies, third party administrators, consultants. Do not fall into a trap of “convenience” whereby you lose your independence and end up restricting your options and reducing the benefits your employees receive. A broker who claims to be a “one-stop-shop” may actually be a huge red flag for a company that is seeking to implement the strongest, most cost-effective plans in the marketplace
M3 Insurance can help ensure your health plans meet SCA requirements. We understand the complexities and how strictly the government scrutinizes these plans. Select a broker who can guide you and make your company a leader in your field.