Untitled-1

DOL Increases Penalties for Health Plan Violations 

Increased Healthy Plan Penalties Effective August 1st

On July 1, 2016, the Department of Labor (DOL) issued an interim final rule that increases the civil penalty amounts that may be imposed under various federal laws, including the Employee Retirement Income Security Act (ERISA). The interim final rule increases the civil penalty amounts associated with several areas of employee benefits compliance, including:

The increased amounts apply to civil penalties that are assessed after August 1, 2016, for violations that occurred after November 2, 2015.

Background

The 2015 Bipartisan Budget Act (Act) includes provisions to strengthen the civil monetary penalties under various federal laws in order to maintain their deterrent effect. The Act requires the DOL to adjust the civil monetary penalties that it administers under ERISA for inflation. This adjustment includes an initial “catch up” increase to penalty amounts effective August 1, 2016, and subsequent annual adjustments for inflation beginning in January 2017. These adjustments will be based on the Consumer Price Index each year.

Affected Areas 

REQUIREMENT CURRENT PENALTY AMOUNT NEW PENALTY AMOUNT
Failure to file an annual report (Form 5500) with the DOL (unless a filing exemption applies) Up to $1,100 per day Up to $2,063 per day
Failure of a multipleemployer welfare arrangement (MEWA) to file an annual report

(Form M-1) with the DOL

Up to $1,100 per day Up to $1,502 per day
Failure to furnish plan-related information requested by the DOL including Summary Plan Descriptions  Up to $110 per day, but not to exceed $1,100 per request Up to $147 per day, but not to exceed $1,472 per request
Failure to provide Summary of Benefits and Coverage (SBC) Up to $1,000 per failure toprovide the SBC

 

Up to $1,087 per failure toprovide the SBC

 

Failing to provide the annual notice regarding CHIP coverage opportunities  Up to $100 per day foreach failure (each

employee is a separate violation)

Up to $110 per day for each failure (each employee is a separate violation)
Failure to timely disclose information to a state regarding group health plan coverage of an individual who is covered under a Medicaid or CHIP plan Up to $100 per day (each participant/beneficiary is a separate violation) Up to $110 per day (each participant/beneficiary is a separate violation)
Failure by any health plan sponsorto comply with the requirements of the Genetic Information Nondiscrimination Act (GINA) for health plans

 

$100 per participant or beneficiaryper day during noncompliance period as well as other minimum penalty amounts

 

 

$110 per participant or beneficiary per day during noncompliance period as well as other minimum penalty amounts