4 best practices for implementing a gamification-based compliance training system
Many employees may dislike and even disengage when their employer mentions implementing training sessions. Continue reading to learn how implementing a gamification-based training system can help improve employee engagement.
For most employees, compliance training is the Brussels sprouts on the kid’s plate of working life. Everyone knows it’s good for you — one mistake could lead to violations, accidents, reputation issues and maybe a not-so-friendly visit from regulatory body officials — but most workers turn up their noses and disengage when it’s time to dig in.
Considering that merely a third of American workers report feeling engaged at work as it stands, anything that makes matters worse is dangerous. Why risk inflaming indifference — not to mention spending money for on-site instructors — with dull-as-dry-toast workshops?
A far better bet is to embrace technology and go virtual. Of course, online-based compliance training won’t guarantee heightened participation or enthusiasm unless they have one specific aspect: gamification.
Gaming elements can turn any virtual compliance training learning management system (LMS) into an immersive experience. ELearning compliance training participants can enjoy customization and flexibility while getting up to speed on the latest rules, guidelines and protocols. With LMS gamification, HR managers and chief learning officers can cultivate and retain top talent. Best of all, it’s far easier to get buy-in for a robust LMS system with badges, bells and whistles than it is to make a pile of Brussels sprouts disappear from a toddler’s tray.
What exactly is so exciting about game-based learning? In essence, the process prompts active and immediate participation because of extra motivation in the form of rewards. Whether it’s badges or points, these features make eLearning interesting and enjoyable.
In one study, workers who enjoyed themselves retained concepts 40% better than those who weren’t having fun. As you might guess, this is what game-based learning is all about. Engaged employees who rapidly earn rewards are less likely to make errors, so they naturally increase a company’s bottom line and lower the likelihood of compliance fees and penalties. Plus, according to research from TalentLMS, 87% of employees report that gamification makes them more productive.
Merging gamification with training makes plenty of sense. It’s also easy to build a gamification-based compliance training LMS by following a straightforward LMS implementation checklist.
1. Identify your training goals and gaps. Before you can find the best LMS for your needs and move forward with an implementation project plan, you need to spot the inefficiencies of your existing compliance training program. For example, your strategy might not facilitate real-world applications. Knowing this, you would want a compliance training LMS that bridges gaps and imparts practical experience.
2. Discover what motivates and drives employees. Employee gamification only works when employees are properly incentivized, so find out what motivates your team based on their backgrounds and experience levels. Whether a task is challenging or boring, people respond better when they are internally driven to succeed.
Do you need an intuitive LMS with a personalized dashboard? Are the introverts on your team more driven by badges and points than by a sense of competition? Conduct surveys to gauge expectations, and try to follow a 70:20:10 model of training amplified by gaming to foster experimentation and collaboration.
3. Choose the right rewards for desired outcomes. With the plethora of LMS choices on the market, you can select from rewards and mechanics that lead to the exact behaviors and criteria you desire. Want employees to achieve safety online training certifications? Reward “graduates” with points after they have displayed their proficiency. Reinforce favorable behaviors without punishing workers who lag behind. Carrots are far more effective than sticks.
4. Invest in a feature-rich, gamification-supported LMS. Your LMS should not only be user-friendly, but it should also be a portal to game-based learning support and an online asset library. Ideally, your gamified learning platform should include themes and templates that allow you to design visually appealing rewards without reinventing the wheel. Just make sure you have game-based reporting on your side, which makes it simple to track employee performance, completion rates, and other LMS metrics.
Implementing a gamification-based compliance training strategy requires careful budgeting, planning, and analysis. Once you find an LMS platform that delivers the features you need within your price range, you’ll be on your way to mitigating risks and retaining superstar employees. And thanks to gamification, everyone can have a little fun along the way.
SOURCE: Pappas, C. (10 October 2018) "4 best practices for implementing a gamification-based compliance training system" (Web Blog Post). Retrieved from https://www.benefitnews.com/opinion/4-best-practices-for-implementing-a-gamification-based-compliance-training-system?brief=00000152-14a5-d1cc-a5fa-7cff48fe0001
The DOL Audit: Understanding the spectrum of risk
Will the Department of Labor (DOL) audit my plan? The likelihood that the DOL will audit your plan is low, but it can happen. Continue reading to learn more.
Risk is discussed in many contexts in the retirement plan industry. It comes up as a sales tactic; as good counsel from trusted advisors preaching procedural prudence; or, often, in the form of intimidating industry vernacular like fiduciary liability, fidelity bond or the big, bad Department of Labor (DOL).
This DOL paranoia is an underlying motivation that drives the risk conversation with distributors and retirement plan sponsors. Naturally, the question of probability comes up: What is the likelihood the DOL will audit my plan? The answer is low, but it can happen.
When evaluating retirement plans in terms of risk, it’s best viewed as a spectrum. Generally, risk falls into three principal areas of concern.
Lawsuit risk: The likelihood of a fiduciary-based lawsuit for most plan sponsors is very low. However, if this does arise, it will be unpleasant and expensive, both financially and in terms of reputation.
Administrative breach: Upon inspection, most plans will have some kind of operational defect. Typically, these are either an administrative, fiduciary or a document-level defect. If left uncorrected, they are potentially disqualifying. The good news is the IRS has corrective methods in place for the most common errors. Generally, these are relatively inexpensive to correct but will cost clients a little time and money, and likely some aggravation.
DOL/IRS audit risk: It’s usually the administrative breach discussed above that leads to the DOL/IRS investigation or audit. These agencies are not interested in disqualifying plans; they are more interested in correcting them and protecting the participants from misdeeds (intentional or not).
When a DOL audit does happen, it tends to occur because someone invited investigation. This could be the result of a disgruntled former employee, a standard IRS audit that somehow spiraled into a full DOL investigation or a variety of other reasons. So, what can employers and their service providers do to avoid an audit?
The IRS and DOL don’t publish an official list of items that could lead to an investigation, but it’s a good idea to look at your plan’s most recent IRS Form 5500 filings to decrease the likelihood of an audit. This is publicly available information that can signal to government agencies that something might be wrong and they should take a closer look. Some of the more common red flags include:
- Line items that are left blank when the instructions require an answer
- Inconsistencies in the data disclosed on the Form 5500 schedules
- A large drop in the number of participants from one year to the next
- A large dollar amount in the “Other” asset line on the Schedule H
- Having an insufficient level for the plan’s required Fidelity Bond
- Consistently late deposits or deferrals and hard-to-value or non-marketable investments (including self-directed brokerage accounts or employer stock) could be counted as red flags as well.
Plan sponsors should make sure that 5500s are completed with the same care and attention to detail used when filling out IRS 1040, and ensure the plan is being governed properly and in compliance with ERISA. This can be a challenge even for the most well-intentioned plan sponsors, given the complexity of the task and the fact that most employers don’t have the expertise in-house.
Calling in a specialist
But you don’t need to navigate these waters on your own. Instead, you might consider the “Prudent Man” rule, which implies that when expertise is required yet absent, a prudent person outsources the needed expertise. There is a wealth of talented retirement plan specialists and advisors available to help guide you through the audit process or, better yet, steer clear of it altogether.
When considering whether to employ one of these specialists, you will need to evaluate their experience, expertise and training, as well as if they provide services to help the plan sponsor keep the DOL (and the IRS) out of their offices. Some commonly available services include:
- 5500 reviews to help plan sponsors avoid potential audit triggers
- Coaching services to help plan sponsors identify and eliminate some of those difficult-to-value assets like employer stock or self-directed brokerage accounts
- Service provider evaluations to help plan sponsors identify those who will work as a plan fiduciary and put the appropriate guardrails in place on an automated basis
In conclusion, the best way to survive a potential DOL investigation or IRS audit is to avoid one altogether. Committing to best practices for running the plan may mean outsourcing a great deal of the work to specialist retirement plan providers and advisors. Plan sponsors would be wise to consider working with service providers who operate as plan fiduciaries themselves. In this way, you’re more likely to avoid problems and achieve better plan results, leading to better outcomes for everyone.
SOURCE: Grantz, J (7 June 2018) "The DOL Audit: Understanding the spectrum of risk" (Web Blog Post). Retrieved from https://www.benefitnews.com/opinion/dol-audit-understanding-the-spectrum-of-risk?feed=00000152-18a5-d58e-ad5a-99fd31fe0000
Avoiding red flags: How to lower your plan's audit risk
Any size plan can be selected for an IRS or DOL audit. Businesses should learn how to avoid the red flags to help lower their plan’s audit risk. Read this blog post to learn more.
Are only the largest retirement plans audited? The truth is that plans of any size can be audited by the IRS and the DOL. Your plan could be selected for a random audit, or as a result of IRS datasets that target certain types of plans. However, lots of audits are triggered by specific events. Learning to avoid the red flags can help reduce your risk and increase the odds that you will survive any audit for which you are selected without major problems.
Your Form 5500 can be audit bait
Bad answers to Form 5500 can attract the Labor Department’s attention and serve as audit bait. The best way to make sure that your Form 5500 filing doesn’t lead to an audit is to check it carefully — with outside assistance if necessary — to make sure that the compliance questions are answered correctly.
For example, one compliance question asks whether the plan is protected by an ERISA bond and if so, the amount of coverage. Never answer “no” to this question. If for some reason you didn’t have a bond before, get one now. It is even possible to obtain retroactive coverage.
A coverage amount that is too low is also a red flag. In most cases, the bond must be for at least 10% of plan assets at the beginning of the year, although plans with certain types of investments must have higher coverage. Since assets at prior year end and at the beginning of the year are also shown on the 5500, showing an amount lower than 10% of those assets will invite the DOL to follow up.
The DOL will also look at the investment and financial information shown in the asset report. If your plan has many alternative investments such as hedge funds, has invested in other hard-to-value investments, or if you have large amounts of un-invested cash, you may also be inviting a follow up by the DOL. If your asset values as of the end of the prior year do not match your opening year balance for the succeeding year, you are also inviting unwanted inquiries.
Other answers that may get you targeted for further investigation are: if you indicate that you have late deposits of employee contributions or that you have not made required minimum distributions to former employees who are 70.5 years old. Note that this question does not need to be answered “Yes” if reasonable efforts have been made to find the participants but they still can’t be located.
Don’t ignore employee claims and complaints
Many plan sponsors don’t realize that employee complaints to the IRS and DOL often lead to audits. Make sure that employee questions and complaints receive a response, and if a formal claim for benefits is filed, make sure to follow the ERISA regulations on benefit claims and appeals. It is a good idea to run any denials past your ERISA attorney to make sure they are consistent with the written plan terms and clearly explain the participant’s appeal rights and the reason for the denial.
Be prepared
If your plan is selected for IRS or DOL audit, expect to be asked to provide executed plan documents, participant notices and fiduciary policies, such as your Investment Policy Statement. Keep these in a file to avoid a last-minute scramble to satisfy the auditor’s requests. You should also be prepared to show that you are making diligent efforts to find missing participants, deal with defaulted loans and review plan fees, which are current hot issues for auditors.
To be even better prepared, you can do a self-audit to identify problems that need correction before the IRS or DOL do.
SOURCE: Buckmann, C (29 June 2018) "Avoiding red flags: How to lower your plan's audit risk" (Web Blog Post). Retrieved from: https://www.benefitnews.com/opinion/irs-dol-audit-red-flags-and-avoiding-plan-risks
Audit: What should I expect from a Department of Labor audit?
Being audited is a huge burden without the right preparations and defense. For companies, being audited, demonstrating proof, knowledge and compliance of the requirements in their workforce is a lengthy and stressful process, particularly when you get caught off guard. Staying prepared every step of the way will take the weight of a possible audit off your shoulders.
Employers should keep in mind that the U.S. Department of Labor (DOL) can audit employers at any time, although the most common reason for a DOL audit is a complaint from an employee. The DOL has also targeted employers in low-wage industries for wage and hour violations, particularly in the areas of agriculture, day cares, restaurants, garment manufacturing, guard services, health care, hotels and motels, janitorial services, and temporary help. By understanding the audit process and following the guidance below, employers will be better prepared to handle a DOL audit.
- The DOL typically provides little advance notice of an audit. However, you can request time to gather records. Typically, the amount of time an employer will have will depend on the auditor.
- Contact the auditor to find out specific information about the audit. Key questions to ask are the focus of the investigation (e.g., overtime pay compliance, exempt vs. nonexempt classification, minimum wage compliance), the time period for records the auditor wants to view, and the names of any employees that may be interviewed.
- Gather the records in accordance with guidance provided by the auditor. Be prepared to provide documentation related to the company compensation policies and procedures. Keep track of exactly what information was provided. Do not provide records other than what the auditor requests.
- Designate one or two company representatives to work with the auditor. Some employers choose to designate their company’s legal counsel; other employers will designate senior managers. The representatives will have the duty to provide documents requested,arrange for any additional records to be provided to the auditor (if necessary) and coordinate employee interviews.
- During the audit, be courteous to and cooperative with the auditor. It is a good practice to provide a quiet area for the auditor to work in.
- At the end of the audit, ask the auditor to provide a summary of the results of the investigation. This information will help an employer review options for resolutions if any violations are found. If violations are found, employers are encouraged to consult legal counsel before any settlements are reached with the DOL.
To be proactive, employers should consider a self-audit, which consists of the following steps:
- Review job descriptions.
- Understand the differences between federal and state laws and ensure that the laws are correctly applied to employees.
- Ensure that FLSA classifications are correct.
- Keep accurate payroll records.
- Apply policies consistently.
- Make sure all records are complete and work to resolve any inconsistencies.
- Determine how to address any areas of concern identified via the self-audit.
Source:
SHRM (12 September 2012). "Audit: What should I expect from a Department of Labor audit?" [web blog post]. Retrieved from address https://www.shrm.org/resourcesandtools/tools-and-samples/hr-qa/pages/whatshouldiexpectfromadolaudit.aspx
DOL Proposes Rule to Expand Association Health Plans for Small Employers
What are the pros and cons of the proposed rule by the DOL allowing small business to purchase health insurance without some of the restraints imposed on smaller employers by the ACA and individual states? Let's take a look.
A proposed rule by the U.S. Department of Labor (DOL) would allow small businesses to band together and purchase health insurance without some of the regulatory requirements that the individual states and the Affordable Care Act (ACA) impose on smaller employers.
Advocates of the proposal say that it will make it easier for small businesses to afford better coverage for their employees. Critics contend that it's a way to get around the ACA requirement that plans cover essential health benefits.
The proposal, published in the Federal Register on Jan. 5, expands access to what the rule calls "small business health plans," which are more commonly known as association health plans.
The proposed rule attempts to achieve many of the objectives of the Small Business Health Fairness Act introduced in Congress last year, which also sought to allow small businesses to offer employees health coverage through association health plans.
The rule modifies the definition of "employer" under the Employee Retirement Income Security Act (ERISA) regarding entities—such as associations—that could sponsor group health coverage. An association can be formed for the sole purpose of offering the health plan.
A broader interpretation of ERISA could potentially allow employers anywhere in the country that can pass a "commonality of interest" test to join together to offer health care coverage to their employees. For instance, an association could show a commonality of interest among its members on the basis of geography or industry, if the members are either:
- In the same trade, industry or profession throughout the United States.
- In the same principal place of business within the same state or a common metropolitan area, even if the metro area extends across state lines.
Sole proprietors also could join small business health plans to provide coverage for themselves as well as their spouses and children.
"Many small employers struggle to offer insurance because it is currently too expensive and cumbersome," the DOL said in a press release. "Up to 11 million Americans working for small businesses/sole proprietors and their families lack employer-sponsored insurance. … These employees—and their families—would have an additional alternative through Small Business Health Plans (Association Health Plans)."
"With the passage of the tax bill, which includes a reduction of the individual mandate penalty, it's very likely that many people will drop their health care coverage in the individual marketplace," said Chatrane Birbal, the Society for Human Resource Management's senior advisor for government relations. Association health plans "could provide an option for small employers to offer competitive and affordable health benefits to their employees, thereby increasing the number of Americans who receive coverage through their employer," she noted.
For most midsize-to-large employers and their employees, however, the proposed rule will likely result in no change in health coverage, Birbal said.
Large Group Treatment for Small Employers
The ACA requires that nongrandfathered insured health plans offered in the individual and small group markets provide a core package of health care services, known as essential health benefits. Large employer group plans and self-funded plans are not required to comply with the essential benefit requirements.
Last October, President Donald Trump signed an executive order directing the DOL and other agencies to issue regulations that would allow more employers to band together and purchase health care plans, including across state lines. The DOL's proposed rule would do this by allowing employers that currently can only purchase group coverage in their state's small group market to join together to purchase insurance in the less-regulated large group market. The 50 states most often limit the large group market to employers with 50 or more employees, while a handful of states limit this market to employers with 100 or more employees.
By joining together, employers could not only avoid those regulatory restrictions that pertain only to the small group market, but also could reduce administrative costs through economies of scale, strengthen their bargaining position to obtain more favorable deals, enhance their ability to self-insure, and offer a wider array of insurance options, the DOL said.
The rule would maintain current employee protections by:
- Preserving nondiscrimination provisions under the Health Insurance Portability and Accountability Act (HIPAA) and the ACA. with regard to association health plans.
- Clarify that an association health plan cannot restrict coverage of an individual based on any health factor.
"Small Business Health Plans (Association Health Plans) cannot charge individuals higher premiums based on health factors or refuse to admit employees to a plan because of health factors," the DOL said. The Employee Benefits Security Administration "will closely monitor these plans to protect consumers."
The DOL will accept comments on the proposed rule during a 60-day period ending on March 6. "There are likely to be a number of changes to the proposed regs before they become final, and there really are a number of issues related to the proposal which need to be answered," said Robert Toth, principal at Toth Law and Toth Consulting in Fort Wayne, Ind.
Differing Reactions
Insurance sold nationwide through associations of small employers "would have to comply with far fewer standards" than current small group market plans, according to a statement by the Commonwealth Fund, a nonprofit foundation that supports expanding health care coverage to low-income and uninsured Americans. "Federal administrative changes that allow some health plans to bypass state and federal rules but not others create an uneven playing field, destabilize insurance markets, and put consumers at risk."
"Allowing the expansion of association health plans could mean the proliferation of coverage that does not provide the essential benefits people with diabetes need to effectively manage their disease and to prevent devastating and costly complications," said a statement from the American Diabetes Association.
The proposal, however, is supported by the National Retail Federation. "Main Street retailers need more affordable health care options and a level playing field with larger companies that are better positioned to negotiate for lower insurance costs," said David French, senior vice president for government relations at the federation, in a statement.
"These changes could be attractive to small employers with relatively healthy employees and who would not need the full range of benefits offered by the ACA's exchange plans" for the small group market, said Beth Halpern, health law partner at Hogan Lovells in Washington, D.C.
Like Trump's executive order, the proposed regulation seeks "to liberalize the rules to build large insurance pools of small employers," said Perry Braun, executive director at Benefit Advisors Network (BAN), a Cleveland-based consortium of health and welfare benefit brokers. "Spreading the risk across large numbers of participants in an insurance pool is thought to bring insurance premium stability," he said, adding, "It will be interesting to see [which brokers] enter the market to aggregate small businesses" into the new plans.
Source:
Miller S. (8 January 2018). "DOL Proposes Rule to Expand Association Health Plans for Small Employers" [ web blog post]. Retrieved from address https://www.shrm.org/ResourcesAndTools/hr-topics/benefits/Pages/DOL-association-health-plans-rule.aspx
Using Compliance Reviews to Prepare Employers for Audit
Original post benefitsnews.com
A retirement plan sponsor has a fiduciary duty to ensure that the plan complies with all federal and state rules and regulations. Plan sponsors must follow the plan’s provisions without deviating from them unless the plan has been amended accordingly. Failure to follow the provisions can lead to plan disqualification. For the 2015 fiscal year, the Employee Benefits Security Administration reported that 67.2% of employee benefit plans investigated resulted in financial penalties or other corrective actions.
An operational compliance review can help. It’s different from a financial audit. An audit reviews the plan as it relates to the presentation of financial data; it is not designed to ensure compliance with all of ERISA’s provisions or other requirements applicable under the Internal Revenue Code. Operational compliance reviews, on the other hand, are concerned with validating the process being reviewed, with no restriction on whether it impacts the financials. An operational compliance reviewer wants to know that the process works, whether it is replicable, and consistent with the plan document.
Where to Begin
First, employers need to define the scope of the plan. To help define the scope, advisers and employers consider the following questions:
- Does the plan sponsor have a prototype, volume submitter, or individually designed plan document?
- Have there been any recent changes to the plan document?
- Have there been any changes to any of the service providers, including payroll and record keepers, over the past few years?
- Has the plan sponsor had to perform any corrections recently, perhaps without fully understanding how the errors occurred?
- Have there been any data changes or file changes as they are provided to the record keeper?
- Is there money in the budget to cover the review?
With the scope defined, a thorough operational compliance review should involve the following key steps:
- Review of the plan document and amendments, along with summary plan descriptions and a summary of material modifications;
- Review of required notices sent to participants, such as quarterly statements, initial and annual 404(a)(5) participant fee disclosures, Qualified Default Investment Alternative notices, safe harbor notices, etc.;
- Review of service provider contracts, such as record keepers and trustees/custodians;
- Discussions with the people who administer the plan, which may include the record keeper, trustee/custodian, payroll and benefits administration personnel;
- Review of plan administrative manuals, record keeper operational manuals, procedural documents and policy statements; and
- Review of sample participant transactions and data for each of the areas being reviewed.
Reviewing and comparing a record keeper’s administrative or operational manual with the plan document is an essential step in the review process. There tends to be a higher propensity for errors to occur when a record keeper is administering a plan that has an individually designed document versus its own prototype document. Lack of documented procedures can be cause for concern in ensuring the consistency and integrity of administering the plan, especially when there are any changes to the record keeping infrastructure, such as changes to plan provisions, modifications or upgrades to the record keeping system, or even personnel turnover.
While this process may lead to the discovery of errors you don’t necessarily want to find, you do want to gain perspective and overall confidence on your plan’s operations. Aside from finding errors, here are some things you should capture from an operational compliance review:
Areas of improvement for operational efficiency, including opportunities to maximize record keeper’s outsourcing capabilities;
- Answers to questions on whether the plan’s provisions and administration would be considered “typical”, and how they compare to industry best practices;
- An overall rating or report card of how a record keeper or service provider compares to industry peers; and
- Confidence that if your client’s plan is approached by the DOL or IRS, it’s ready for an investigation that will conclude with a letter saying “no further action is contemplated at this time”.
Embarking on an operational review may seem intimidating but, with a well-thought-out plan, process, and the right resources, a successful review will uncover potential issues that can be resolved the IRS or DOL arrive at your client’s door. The rewards for your efforts may include perspective on industry best practices and how you can operate the plan more efficiently.
