Group Health Plan Sponsors Should Stay Up to Date with Requirements to Avoid Unnecessary Penalties
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Benefit Compliance Penalties Updated for 2024

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.

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 sales@adminamerica.com 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.

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IRS Releases Updated 2023 PCORI Tax Rates

This week the IRS announced the applicable per participant PCORI tax rates for group health plans with Plan Years ending during the last three months of 2023.  The applicable rate will be $3.22 per participant. The new rates were announced in IRS Notice 2023-70.  The $3.00 per participant applicable rate for plans with Plan Year ending during the first nine months of 2023 was announced last year.

The PCORI tax for Plan Years ending during 2023 is paid in July 2023 using IRS Form 720. The form contains detailed instruction for how to calculate the amount of tax as well as where and when to pay it.

Group health plan sponsors or their professional benefit advisors who need assistance with the PCORI tax filing process are welcome to schedule a call with Admin America’s President, Trey Tompkins. Interested individuals can schedule a call with Trey for an available time that is most convenient for them here.


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IRS Finally Releases Updated 2019 PCORI Tax Rates

This week the IRS finally announced the applicable per participant PCORI tax rates for group health plan with Plan Year ending during the last three months of 2019.  The applicable rate will be $2.54 per participant.

When the PCORI tax was introduced as part of the Affordable Care Act, it went into effect for Plan Years ending on or after October 1, 2012.  The ACA provided for the tax to increase each year based on inflation with the increased rates going into effect each subsequent October 1.  The increases have historically been announced by the end of each calendar year.  Because the PCORI tax payments are due by July 31 of the following calendar year insurers and Plan Sponsors of self-insured group health plans had plenty of time to calculate their tax and prepare their filings.

Under the terms of the ACA, the PCORI tax would not apply to any Plan Years ending on or after September 30, 2019.  Therefore, there was no need for the IRS to issue an annual increase for Plan Years ending in the fourth quarter of 2019.  However, on December 20, 2019, President Trump signed the “Further Consolidated Appropriations Act” into law. The Act extended the PCORI tax for another 10 years.

At that point, plans with Plan Year ending during the first 9 months of 2019 knew that their tax rate for payments due this July would be $2.45 but we did not know the $2.54 rate for Plan Years ending during the last three months of 2019 until this week.

The new rates were announced in IRS Notice 2020-44.  Additionally, this week the IRS published an updated version of  Form 720 to reflect the extension of the PCORI tax and the new rate for Plan Years ending in late 2019.  Insurers and Plan Sponsors of self-insured group health plans may complete their filings and make their tax payments at this time.” 

More information about the PCORI tax, including which plans are required to file a return and pay the tax, as well as instruction for completing the process are available in a guide we wrote for clients this month.  It is available online here.


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