The Importance of Long-Term Disability Program Auditing

As an employer, you are responsible for providing a robust benefits package that meets the ever-evolving needs of associates. Just as critical is making sure plans are reviewed thoroughly.

At The Fedeli Group, we perform thorough routine audits for employer’s long-term disability (LTD) plans and designs to yield comprehensive benefits and fiduciary stewardship. Detailed auditing of an employer’s Long-Term Disability (LTD) program is crucial for several reasons. Here are some key points highlighting the importance of such audits:

1. Compliance: Auditing ensures that the employer’s LTD program is compliant with applicable laws and regulations. Employment and insurance laws may have specific requirements for disability coverage, such as minimum benefit levels, waiting periods, and eligibility criteria. By conducting a detailed audit, an employer can identify any non-compliance issues and rectify them promptly, reducing the risk of legal consequences.
2. Accuracy of Benefits: Auditing the LTD program ensures that the benefits provided to employees are accurate and consistent. This involves reviewing the calculations used to determine benefit amounts, verifying that the appropriate definitions of disability are being applied, and confirming that employees are receiving the correct benefits based on their individual circumstances. An accurate and fair LTD program instills trust and confidence among employees.
3. Cost Management: LTD programs can be costly for employers, particularly if there are inefficiencies or inaccuracies in the administration. Auditing allows employers to assess the financial aspects of the program, including premium rates, claims management, and reserves. By identifying any cost drivers or areas of potential savings, employers can take appropriate actions to manage and control expenses effectively.
4. Risk Mitigation: Audits help employers identify potential risks and vulnerabilities within their LTD program. By thoroughly reviewing the program’s policies, procedures, and documentation, employers can identify areas where the program may be susceptible to fraudulent claims, administrative errors, or inadequate internal controls. This enables employers to implement preventive measures, strengthen controls, and minimize the risk of financial losses.
5. Employee Satisfaction: An LTD program that is audited regularly demonstrates an employer’s commitment to providing reliable and comprehensive benefits to its employees. Through the audit concerns and employers can identify areas for improvement, address employee concerns, and enhance the overall quality of the program. By ensuring the LTD program is well-managed, employers can enhance employee satisfaction, promote loyalty, and attract and retain top talent.
6. Fiduciary Responsibility: Employers have a fiduciary duty to act in the best interests of their employees, including the administration of benefit programs. Auditing the LTD program helps employers fulfill this responsibility by ensuring that the program is administered fairly, accurately, and transparently. It also helps employers demonstrate their compliance with fiduciary obligations and protects them from potential legal disputes.
   

In summary, detailed auditing of an employer’s LTD program is essential for compliance, accuracy of benefits, cost management, risk mitigation, employee satisfaction, and fulfilling fiduciary responsibilities. By conducting regular audits, employers can identify and rectify any deficiencies, thereby enhancing the overall effectiveness and fairness of the program.

Please contact us today to discuss your program and your needs.