DOL Increases Penalties for Health Plan Violations

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:

  • Failing to file an annual Form 5500 (as 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 new penalty amounts represent a significant increase over prior years, i.e. penalty for failure to file Form 5500 increased from $1,100 per day to $2,063 per day.

Employers should become familiar with the new penalty amounts and review their health plans to ensure compliance with ERISA’s requirements.  For example, employers should make sure they are complying with ERISA’s reporting and disclosure rules, including the Form 5500, annual CHIP notice and SBC requirements.


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 must include:

  • An initial ‘‘catch-up’’ increase to the penalty amounts, effective August 1, 2016; and
  • Subsequent annual adjustments for inflation, beginning in January 2017.

Catch-up Increase

The DOL’s interim final rule implements the initial catch-up increases to ERISA’s civil monetary penalties. The new penalty amounts will become effective August 1, 2016, and may apply for any violations occurring after November 2, 2015.

The excise tax for group health plan violations, including violations of the ACA’s market reforms, is not impacted by these adjustments. This excise tax is generally $100 per day, per individual, per violation, subject to certain minimum and maximum amounts.

Annual Adjustments

After the initial catch-up amounts become effective on August 1, 2016, the DOL must update its maximum penalty amounts based on the Consumer Price Index each year. The first annual inflation adjustment will be allowed for 2017. The DOL is required to publish annual updates reflecting the annual increases. These updates must be published in the Federal Register by January 15 of each year.


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The information provided is for informational purposes only and does not constitute legal advice. The information above contains only a summary of the applicable legal provisions and does not purport to cover every aspect of any particular law, regulation or requirement. Depending on the specific facts of any situation, there may be additional or different requirements. This is to be used only as a guide and not as a definitive description of your compliance obligations.