The Department of Labor (DOL) announced annual inflation increases to several employee benefit compliance penalties last week. The full schedule of the annual inflation related increases is available online. The new maximums are effective for compliance penalties assessed after January 15, 2024. The date the benefit related violation occurred does not impact the applicable penalty limit.
Forms 5500 Penalties
ERISA covered Group Health Plans with more than 100 participants must file a Form 5500 for each Plan Year. The filings are due within seven months following the end of each Plan Year. The maximum daily penalties for failing to timely file Form 5500 increased from $2,586 to $2,670. There is no cap on the total potential penalty. Large benefit plans that fail to file for several years face potential compliance penalties of millions of dollars. Late filers drastically reduce these potential penalties by taking advantage of the government’s Delinquent Filer Voluntary Compliance Program.
SBC Related Penalties
Under the Affordable Care Act (ACA), group health plans must provide plan participants with a Summary of Benefits and Coverage (SBC). SBCs must be provided each Plan Year and must meet specific appearance, language and content requirements. The maximum compliance penalties for failing to provide SBCs to participants increased from $1,362 to $1,406 per failure. Each plan participant who is not provided a SBC in a timely manner is considered to be a unique failure for the purposes of the penalties.
Although SBCs are typically provided by a benefit plan’s insurer or third party administrator, it is typically the employer’s responsibility to distribute the provided forms to its employees.
Admin America’s Benefit Compliance Experts Can Help!
Admin America encourages employers and their professional benefit advisors to direct any questions they have about employee benefit related compliance penalties to our experts via e-mail at firstname.lastname@example.org or by calling (678) 578-4644. They can also request a call from us. More information about Admin America’s services is also available online.