Annual Adjustments to Penalties for Health Benefits & Employer Plans cover

Annual Adjustments to Penalties for Health Benefits & Employer Plans

  • Learn about 2023 annual adjustments to penalties for benefits-related violations.
  • Discover information related to Form 5500.
  • Learn about the increased penalty for failing to file an SBC.
  • Find information about other group health plan penalties.
  • Learn about penalties associated with 401(k) plans.
  • Find the latest information about penalties associated with MEWA filings.

The U.S. Department of Labor (DOL) recently announced the 2023 annual adjustments to civil monetary penalties for a wide range of benefits-related violations. Legislation enacted in 2015 requires annual adjustments to certain penalty amounts by January 15 of each year.

The 2023 adjustments are effective for penalties assessed after January 15, 2023, with respect to violations occurring after November 2, 2015. Fiducial has highlights below.

Annual Adjustments to Penalties for Health Benefits & Employer Plans

Form 5500

Employers must file this form annually for most ERISA plans. This form provides the IRS and DOL with information about the plan’s operation and compliance with government regulations. The maximum penalty for failing to file Form 5500 has increased from $2,400 per day to $2,586 per day that the filing is late.

Summary of Benefits and Coverage (SBC)

The maximum penalty for failing to provide an SBC has increased from $1,264 to $1,362 per failure.

Other group health plan penalties

Violations of the Genetic Information Nondiscrimination Act may result in penalties of $137 per participant per day. This is an increase from $127. Examples of violations include establishing eligibility rules based on genetic information, requesting genetic information for underwriting purposes, and failing to meet requirements related to disclosures regarding the availability of Medicaid or children’s health insurance program assistance.

401(k) plan disclosure, recordkeeping, and reporting

For plans with automatic contribution arrangements, penalties for failing to provide the required ERISA preemption notice to participants have increased from $1,899 per day to $2,046 per day. Penalties for failing to provide blackout notices (required in advance of certain periods during which participants can’t change their investments or take loans or distributions) or notices of diversification rights have increased from $152 per day to $164 per day. And the maximum penalty for failure to comply with ERISA recordkeeping and reporting requirements increased from $33 to $36 per employee.

Multiple Employer Welfare Arrangement (MEWA) filing

A Multiple Employer Welfare Arrangement (MEWA) is generally defined as a single plan that covers the employees of two or more unrelated employers. Penalties for failure to meet applicable filing requirements have increased from $1,746 per day to $1,881 per day. These include annual Form M-1 filings and filings upon origination.

Adjustments have also been made to other benefit-related DOL penalties, such as for failure to provide certain information requested by the agency.

Although the affected penalties relate to a wide range of compliance issues, not all violations will trigger the highest penalty. In some instances, the DOL has the discretion to impose lower penalties, such as under programs designed to encourage Form 5500 filing.

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