Last week, we upgraded our software and changed our document management system. For non-computer savvy people like me, it was a real challenge. The trainer told me that whenever I did something that caused an error, I should write down what I did and ask him to explain to me what went wrong and how to avoid it in the future. This struck me as an interesting piece of advice that could also be good for plan sponsors and plan administrators when it comes to compliance so when I finally was able to get access to the internet, I decided to write my thoughts about it.
I have written before about fiduciaries and their responsibility to act diligently and to make informed decisions. It is essential that fiduciaries document the steps they took in reaching decisions related to plan operations. The process for choosing advisors, service providers or investments should all be documented so that there is a record of how the decision was reached to demonstrate diligence. Similarly, when mistakes are made, there should be a record of how they were identified, how they were corrected and what steps are being taken to make sure they do not happen again.
When it comes to benefit plan administration, there are several "corrective mechanisms" available to fix mistakes. Sometimes the best mechanism is to document the procedure being implemented to prevent them from happening in the future. Things like written policies and procedures can be a boon to both show diligence and to also adjust future administration. Memorializing how and why the actions were taken give us a roadmap in case a mistake occurs so we can look back and see where a wrong turn might have been made. It is very difficult to fix a mistake if you can't identify why it happened or what practice or policy was ignored.
I think this will become even more relevant the closer we get to full PPACA compliance. Plan sponsors are making decisions about how to count employees, what coverage to offer and how to measure hours. Undoubtedly, mistakes will be made. There should be a record of how conclusions were reached for each of these issues so that there is both proof of diligence and a reference point for correction if necessary. Mistakes can be fixed, but it is usually easier (and less costly) to fix things if there is a record to look back on.