The U.S. Department of Health and Human Services (HHS) has published its Annual Civil Monetary Penalties Inflation Adjustment in the Federal Register, which sets the amount of civil penalties for violating laws concerning the Health Insurance Portability and Accountability Act (HIPAA), the Medicare Secondary Payer (MSP) statute, and the provision of Summary of Benefits and Coverage (SBC).
These adjustments apply to violations on or after November 2, 2015, and penalties assessed on or after August 8, 2024. Although HHS is supposed to make these adjustments to keep up with inflation by January 15 each year, they historically have adjusted the penalty amounts later in the year. HHS made the last adjustment to these penalties on October 6, 2023.
Employer-sponsored health plans should be aware of the following adjustments, which potentially affect them if they violate HIPAA, the MSP statute, or their obligations to provide participants and beneficiaries with SBCs before enrollment or re-enrollment in a group health plan.
Health Insurance Portability and Accountability Act (HIPAA)
HIPAA administrative simplification sets privacy, security, breach notification, and electronic healthcare transaction standards. Penalties fall within one of four tiers based on increasing levels of severity and culpability. Each tier contains a minimum and maximum penalty and an annual cap on multiple identical violations. The four tiers are as follows:
- Tier 1 – Lack of Knowledge – Penalties range from a minimum of $141 to a maximum of $71,162, with a calendar-year cap of $2,134,831.
- Tier 2 – Reasonable Cause and Not Willful Neglect – Penalties range from a minimum of $1,424 to a maximum of $71,162, with a calendar-year cap of $2,134,831.
- Tier 3 – Willful Neglect, Corrected Within 30 Days – Penalties range from a minimum of $14,232 to a maximum of $71,162, with a calendar-year cap of $2,134,831.
- Tier 4 – Willful Neglect, Not Corrected Within 30 Days – Penalties range from a minimum of $71,162 to a maximum of $71,162, with a calendar-year cap of $2,134,831.
Medicare Secondary Payer (MSP)
The Medicare Secondary Payer statute prevents group health plans from considering the Medicare entitlement of a current employee, spouse, or family member. Violation of this statute can result in penalties as follows:
- Offering incentives to Medicare-eligible individuals not to enroll in a plan that would otherwise be primary:$11,524.
- Responsible reporting entities failing to provide information identifying situations where the group health plan is primary:$1,474.
Summary of Benefits and Coverage (SBC)
Health insurers or non-federal government health plans must provide an SBC to participants and their beneficiaries before enrollment or re-enrollment in a group health plan. The penalty for willfully failing to do so is $1,406 per violation.
HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and H.R./employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 470-571-1007.
Hall Benefits Law, LLC
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