HHS Increases Annual Civil Monetary Penalties

May 9, 2022
Hall Benefits Law, LLC

The U.S. Department of Health and Human Services (HHS) has announced increases to civil monetary penalties assessed after March 17, 2022, for statutory violations. Although HHS is supposed to adjust these penalties by January 15 of each year, these adjustments have come at irregular intervals. For instance, HHS missed the January 15 deadline for 2021 and 2022, with the most recent adjustment occurring on November 15, 2021.

The 2022 adjustment for inflation is based on a cost-of-living increase of 1.06222%. Health plans must also comply with some statutes that fall under HHS authority, so plan sponsors should be aware of the adjustments to civil penalty amounts that they may be facing for these statutory violations.

HIPAA Administrative Simplification

HIPAA administrative simplification sets privacy, security, breach notification, and electronic health care transactions standards. HIPAA provides for four distinct tiers of violations, based on increasing levels of culpability for violations. Each tier contains minimum and maximum penalties and a calendar year cap on penalties for multiple violations of the same provision. The penalties for each tier range as follows:

  • Tier 1 – Lack of Knowledge – $127 – $63,793, with an annual cap of $1,919,173
  • Tier 2 – Reasonable Cause and Not Willful Neglect – $1,280 – $63,973, with an annual cap of $1,919,173
  • Tier 3 – Willful Neglect, Corrected Within 30 Days – $12,794 – $63,973, with an annual cap of $1,919,173
  • Tier 4 – Willful Neglect, Not Corrected Within 30 Days – $63,973 – $1,919,173, with an annual cap of $1,919,173

Medicare Secondary Payer

The Medicare Secondary Payer statute bars a group health plan from considering the Medicare entitlement of a current employee or their spouse or family member. Violating this statute results in monetary penalties imposed by HHS. The penalty amounts for employer-sponsored health plans have increased as follows:

  • Offering Incentives to Medicare-Eligible Individuals Not to Enroll in a Plan that Otherwise Would Be Primary – $10,360
  • Failure of Responsible Reporting Entities to Provide Information Identifying Situations Where the Group Health Plan is Primary – $1,325

Summary of Benefits and Coverage

Plans must provide a Summary of Benefits and Coverage (SBC) to participants and beneficiaries before enrollment or re-enrollment in a group health plan. Penalties for each failure of a health insurer or a non-federal governmental health entity to provide an SBC is $1,264, which is a $74 increase.

HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and HR/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.

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Hall Benefits Law, LLC

HBL offers employers comprehensive legal guidance on benefits in mergers and acquisitions, Employee Stock Ownership Plans (ESOPs), executive compensation, health and welfare benefits, healthcare reform, and retirement plans. We counsel a wide spectrum of clients including small, mid-sized, and large companies, 401(k) investment advisors, health insurance brokers, accountants, attorneys, and HR consultants, just to name a few. HBL is passionate about advising clients, and we are dedicated to our mission: to provide comprehensive, personalized, and practical ERISA and benefits legal solutions that exceed client expectations.

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