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:
- Failing to file an annual Form 5500 (if applicable);
- Failing to provide the annual notice regarding premium assistance under the Children’s Health Insurance Program (CHIP); and
- Failing to provide the Summary of Benefits and Coverage (SBC), as required by the Affordable Care Act (ACA).
The increased amounts apply to civil penalties that are assessed after August 1, 2016, for violations that occurred after November 2, 2015.
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.
|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