Department of Labor increases 2024 penalty amounts for health and welfare benefit plan violations

The Department of Labor (DOL) has updated its 2024 civil monetary penalties, adjusting for inflation and covering a wide range of benefit-related violations.

Federal regulations require the DOL to recalibrate penalties annually by Jan. 15, 2024. These adjusted dollar figures for 2024 are effective for any civil penalties imposed after Jan. 15 under the purview of the Employee Benefits Security Administration (EBSA), a DOL enforcement arm. While the DOL has the discretion to impose reduced penalties – or waive them altogether in instances of good-faith correction efforts – it is crucial that plan sponsors understand the potential consequences of noncompliance.

The increased penalties of note include the following:

  • Form 5500:

     Failure to timely file annual report Form 5500 subjects a plan sponsor to a penalty of $2,670 per day, starting on the date of the failure.

Lockton comment: The EBSA offers an amnesty program called the Delinquent Filer Voluntary Compliance Program (opens a new window) for late filers that voluntarily submit tardy Forms 5500. Penalty amounts under the program are significantly reduced to as little as $10 per day, but the filing under the amnesty program must be initiated by the late filer, not by federal enforcement.

  • Form M-1:

     Failure to file annual report Form M-1 on a timely basis subjects a plan sponsor to a penalty of $1,942 per day (Form M-1 filing requirement applies exclusively to multiple employer welfare arrangements).

Lockton comment: There is no formal amnesty program for late M-1 filers, but the EBSA has historically been slow to penalize voluntary late filers.

  • Summary of Benefits and Coverage:

     Failure to timely provide a compliant Summary of Benefits and Coverage (SBC) per the Affordable Care Act (ACA) requirements subjects a plan sponsor to a penalty of $1,406 per failure.

Lockton comment: This penalty is rarely enforced to its maximum extent. Nevertheless, it’s a reminder to make sure your SBCs are complete and made available as required.

  • Documents requested by the DOL:

     Failure to provide plan information to the DOL upon request, such as a summary plan description or other required plan document, subjects a plan sponsor to a penalty of $190 per day, with a maximum penalty of $1,906 per occurrence.

  • CHIP notice:

     Failure to provide each employee with notice related to state-provided premium assistance (commonly referred to as a Medicaid/CHIP notice or CHIPRA notice) subjects a plan sponsor to a penalty of $141 per day, per employee. A related requirement provides that employers must, upon request, provide disclosure of group health plan benefits to states for Medicaid- and CHIP-eligible individuals. The penalty for failure to provide that disclosure also increased to $141 per day, per employee.

Lockton comment: We’ve seen little penalty enforcement in this context. Typically, an EBSA auditor will simply work with the plan sponsor to implement sound administrative processes to provide the required notices, unless there is a well-worn pattern of ongoing noncompliance.

For a more comprehensive list of health and welfare plan penalties for 2024, click here (opens a new window).

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