The Department of Labor (DOL) issued their final regulations for inflation adjustments of civil monetary penalties for employer-sponsored health plans.
This annual adjustment is based on the cost-of-living increase of 1.03%. These annual penalty adjustments are derived from The Inflation Adjustment Act which requires the DOL and other federal agencies to annually adjust their civil penalty levels for inflation no later than January 15 of each year. The DOL released its final rules setting forth the 2019 annual adjustments for inflation for its civil monetary penalties for a wide range of benefits-related violations on January 23, 2019. The higher penalty amounts apply to penalties assessed on or after January 23, 2019.
Failure to accomplish the following Employee Retirement Income Security Act (ERISA) requirements will result in the following:
- Plan Document/ SPD: Up to $156 per day, but not to exceed $1,566 per request.
- Annual Form 5500: maximum penalty of $2,194.
- Summary of Benefits and Coverage (SBC): maximum penalty of $1,156.
- Form M-1 for a MEWA: maximum penalty of $1,597.
- Children’s Health Insurance Program (CHIP) notice: maximum penalty per employee of $117.
- Genetic Information Nondiscrimination Act (GINA): maximum penalty of $117.
For a complete list of the DOL annual adjusted penalties please refer to the Federal Register by clicking here.
The penalties above relate to a wide range of compliance issues, but not all violations will give rise to the highest permitted penalty. The DOL still has discretion to impose lower penalties, such as the delinquent filer voluntary compliance program (DFVCP), which is designed to encourage Form 5500 filings. Taking the proper steps to avoid these penalties is important even if the DOL offers ways to lower penalty amounts.
Aside from these penalty violations there is the risk of potential lawsuits associated with lack of compliance regarding these ERISA violations, a cost which could easily surpass the price point of the penalty amount. As an employer, it is vital to stay in ERISA compliance to ensure you are upholding your responsibility of offering an employer-sponsored health plan to employees.
To ensure ERISA compliance and avoid penalty violations, stay updated on ERISA requirements, given there are often new regulations and updates that may apply to your employer-sponsored health plan. Employers should also ensure notices go out in a timely manner to plan participants. Check the DOL website for any updates or changes that may affect your employer-sponsored health plans.
To discuss the specifications of your employer-sponsored health plan or for additional questions, reach out to your OneDigital consultant and stay in compliance throughout the year.