Department of Labor announces benefit plan penalties for 2026, with only a few changes from last year

The Department of Labor (DOL), the Internal Revenue Service (IRS), and the Department of Health and Human Services (HHS) continue to enforce significant civil monetary penalties for benefit plan compliance failures. Most DOL penalties are reviewed annually under federal inflation‑adjustment rules. For 2026, the DOL did not issue further increases to most ERISA penalties finalized for 2025. This does not signal reduced enforcement. In contrast, HIPAA and Affordable Care Act (ACA) reporting penalties were adjusted upward for 2026 following separate agency guidance.

Penalties that continue unchanged into 2026:

• Form 5500: Failure to timely file the Form 5500 annual report subjects a plan sponsor to a penalty of $2,739 per day, beginning on the date the filing was due.

LOCKTON COMMENT: The Employee Benefits Security Administration (EBSA) continues to offer relief under the Delinquent Filer Voluntary Compliance (DFVC) Program (opens a new window) for late filers who voluntarily correct failures before enforcement action.

• Form M-1: Failure to file Form M-1 on a timely basis may result in a penalty of $1,992 per day. The Form M-1 filing requirement applies exclusively to multiple employer welfare arrangements (MEWAs) and entities claiming exception.

LOCKTON COMMENT: Although EBSA has expanded DFVC relief to include certain Form M-1 filings, statutory penalties remain significant.

• Summary of Benefits and Coverage (SBC): Failure to timely provide a compliant SBC under the ACA may result in a penalty of $1,443 per failure.

• Documents requested by the DOL: Failure to provide plan documents requested by the DOL within 30 days may result in a penalty of $195 per day, capped at $1,956 per request.

• Medicaid / CHIP notice: Failure to provide the annual Medicaid/CHIP premium assistance notice may result in a penalty of $145 per day, per employee.

• Summary Plan Description (SPD) and COBRA notice: Certain penalties are statutory and not inflation-adjusted, including a $110 per day penalty for failure to furnish SPDs or SMMs and a $110 per day, per qualified beneficiary penalty for COBRA election notice failures.

Penalties that increased for 2026:

• HIPAA Privacy and Security violations: HHS increased HIPAA civil monetary penalties for 2026. Depending on the level of culpability, penalties range from $145 per violation to $2,190,294 per calendar year for violations of an identical provision.

• ACA reporting (Forms 1094-C and 1095-C): The IRS increased penalties for ACA reporting failures in 2026. Penalties for failing to timely file or furnish correct forms range from $60 to $340 per return, with higher penalties for intentional disregard.

Key takeaways for plan sponsors

• Many 2026 penalties remain unchanged from 2025

• HIPAA violation and ACA reporting penalties increased for 2026

• Voluntary correction programs remain critical risk-management tools

Even where penalties did not increase, exposure remains significant. Timely filings, accurate notices, and strong documentation remain critical. Voluntary correction programs and good‑faith compliance efforts continue to be important risk‑management tools.

For a more comprehensive list of health and welfare plan penalties for 2026, click here (opens a new window).

Not legal advice: Nothing in this alert should be construed as legal advice. Lockton may not be considered your legal counsel, and communications with Lockton's Compliance Consulting group are not privileged under the attorney-client privilege.

For more alerts, insights and additional information, click here (opens a new window) to visit Lockton's ERISA Compliance Consulting page.

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