Finance News & Insights

Beware: Feds just upped the stakes on penalties for health plan violations

The DOL just increased the amounts employers will have to pay for everything from general penalties to specific health and welfare plan errors.  

Finance pros will want to make a note of these new penalties to see how much more they’re likely to pay for benefits plan violations moving forward.

The new penalty amounts took effect for any penalties assessed on or after January 13, 2017 (for any violations taking place after November 2, 2015).

If it seems like the penalties went up less than a year ago, they did. Last summer the agency also bumped up penalties (also for violations after November 2, 2015).

The complete list adjusted penalties can be found in the Federal Register, but here are some of the major highlights, courtesy of Benefits Bryan Cave:

General penalties

  • Failing to file a Form 5500: $2,097 per day (up from $2,063), and
  • Failing to provide documentation and information requested by the DOL: $149 per day (up from $147/day) with a maximum penalty of $1,496 per request (up from $1,472).

Retirement and pension plans

  • Not providing a blackout notice to plan participants: $133 per-day, per-participant penalty (up from $131)
  • Failure of a multiemployer plan to provide plan documents and other info or to provide an estimate of withdrawal liability: $1,659 (up from $1,632), and
  • Not providing a notice of an automatic contribution arrangement under ERISA $1,659 (up from $1,632).

Failing to provide a notice of benefit restrictions under an underfunded pension plan also carries a $1,659 per day fine (up from $1,632), with the specific penalty for the fiduciary that fails to make a properly restricted distribution from a DB plan jumping to $16,169 per distribution (up from $15,909).

Health and Welfare Plans

  • Failing to give workers their required CHIP notices: $112 per-day per-employee (up from $110)
  • Failing to give State Medicaid & CHIP agencies info about an employee’s health coverage: $112 per-day per participant/beneficiary (up from $110), and
  • Not providing ACA Summary of Benefits and Coverage statements: $1,105 per failure (up from $1,087).

General health plan violations under GINA have been bumped up to $112 per-day, per-participant/beneficiary (up from $110). Plus, additional minimum/maximum GINA violation penalties increased:

  • Minimum penalty for “de minimis” failures that weren’t corrected before receiving a notice from the DOL: $2,790 (up from $2,745)
  • Minimum penalty for GINA failures that aren’t de minimis and aren’t corrected before receiving a DOL notice: $16,742 (up from $16,473).,
  • The maximum penalty on unintentional GINA failures: $558,078 (up from $549,095).

While these penalty amounts are essentially the maximum amounts under the law, employers can’t bank on the DOL negotiating reduced penalties. So firms should expect to get hit with max penalties for violations.

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