Why Staying Compliant with Group Benefits Plans Matters
Offering group benefits is a meaningful way to support your employees and strengthen company culture—but it also comes with serious responsibilities. Ensuring that your benefits plan adheres to federal regulations isn’t just a box to check. It’s a protective shield that helps you avoid steep fines, legal challenges, and damage to your business’s reputation.
Compliance ensures your employees receive clear, fair access to benefits and that your processes are transparent and legally sound. It supports both the wellbeing of your workforce and the financial health of your business—making it a cornerstone of smart, responsible management.
At The Southern Agency, we know navigating regulations can feel complicated. We’re here to simplify the process, keep your records up to date, and provide the guidance you need to stay confidently compliant.
Key Federal Regulations That Guide Group Benefits
Understanding ERISA, ACA, and HIPAA
There are several major federal laws that govern how group benefit plans must be structured and administered. Here’s a breakdown of what they require:
- ERISA (Employee Retirement Income Security Act): Requires employers to create and share Summary Plan Descriptions (SPDs), act prudently in managing benefit plans, and file Form 5500 reports for applicable plans.
- ACA (Affordable Care Act): Applies to larger employers—referred to as Applicable Large Employers (ALEs)—requiring them to provide minimum essential coverage, limit waiting periods, and avoid lifetime caps on essential health coverage.
- HIPAA (Health Insurance Portability and Accountability Act): Protects the privacy and security of employees’ health information and outlines strict rules for how this sensitive data is shared or used.
Overlooking any of these requirements can result in penalties. For example, neglecting to provide an SPD under ERISA could set you back as much as $110 per day for each affected employee. These aren’t small mistakes—they’re costly setbacks that can be prevented with proactive planning and guidance.
Common Compliance Pitfalls to Avoid
Even the most well-intentioned employers can get tripped up by the complexities of regulatory compliance. Here are some of the most common missteps we see:
- Missing or outdated notices: Forgetting to issue required documents—such as COBRA notifications, HIPAA privacy statements, or ACA marketplace options—can quickly get you into regulatory hot water.
- Employee misclassification: Workers mistakenly labeled as independent contractors can lead to missed benefit obligations and back pay issues.
- Poor recordkeeping: Lapses in keeping eligibility records, election forms, or amendment details can compromise your ability to survive an audit.
Consider this real-world scenario: a small business failed to update its COBRA notices per new federal guidelines. When a former employee pursued legal action, the company ended up paying over $20,000 in legal fees and settlements. These avoidable mistakes underscore the importance of reviewing—and refreshing—your documents and procedures regularly.
How to Stay on Track Year Over Year
The Value of Regular Reviews and Expert Support
Compliance isn’t a one-time task—it’s an ongoing responsibility. We recommend employers conduct a full review of their group benefits plans at least once a year. This includes checking your plan documentation, benefits communications, employee eligibility records, and staying current on changing federal and state laws.
Timely audits can help catch issues early and prepare your team for open enrollment, budgeting sessions, or expanding your workforce.
Many businesses rely on trusted insurance professionals or third-party administrators (TPAs) to help manage the moving parts of compliance. With the right partner, you can reduce administrative burden and feel confident your plan is legally solid. The Southern Agency understands how vital this support is—we’re proud to help businesses build benefits programs that are both generous and compliant.
A Quick Compliance Checklist for Employers
Use this list to evaluate how well your benefits plan meets essential legal requirements:
- Verify Summary Plan Descriptions (SPDs) are updated and distributed regularly
- Submit ACA forms (1094/1095) when required for Applicable Large Employers
- Maintain employee health information securely to meet HIPAA privacy rules
- Issue COBRA, CHIPRA, and HIPAA notifications promptly
- Confirm employee classification and benefits eligibility is accurate
- Conduct annual compliance reviews and offer training when needed
Partnering for Peace of Mind
Keeping up with all the details of benefits compliance can feel overwhelming—but you don’t have to tackle it alone. At The Southern Agency, we work alongside businesses to ensure their group benefits programs are aligned with evolving regulations and built to serve their team effectively.
Whether you’re just launching a group plan or want to strengthen your existing strategy, our experts are ready to help you protect your people and your business.
Get started today with The Southern Agency and gain the peace of mind that comes with proactive, professional support.
Have questions about your compliance process? Reach out to The Southern Agency to schedule a consultation—we’re here to support you every step of the way.
