The Department of Labor (DOL) announced in very late January the 2019 annual adjustments to the civil monetary penalties for a wide range of benefits-related violations. Legislation enacted in 2015 requires annual adjustments to certain penalty amounts by January 15 of each year. Because of the government shutdown, however, the 2019 penalties were not published by this deadline and, thus, have a later-than-usual effective date.
As such, the 2019 adjustments are effective for penalties assessed after January 23, 2019, for violations occurring after November 2, 2015. Here are some highlights specifically related to health plans, retirement plans, and other employee benefits:
Form 5500. Employers must file this form annually for most Employee Retirement Income Security Act of 1974 plans to provide the IRS and DOL with information about the plan’s operation and compliance with government regulations. The maximum penalty for failing to file Form 5500 has increased from $2,140 to $2,194 per day that the filing is late.
Group health plans. The maximum penalty for failing to provide the summary of benefits and coverage required under the Affordable Care Act has increased from $1,128 to $1,156 per failure. Violations of the Genetic Information Nondiscrimination Act, such as establishing eligibility rules based on genetic information or requesting genetic information for underwriting purposes, and failures relating to disclosures regarding the availability of Medicaid or children’s health insurance program assistance, may result in penalties of $117 per participant per day. That is up from $114.
Multiple Employer Welfare Arrangements (MEWAs). A MEWA is generally defined as a single plan that covers the employees of two or more unrelated employers. Penalties for failure to meet applicable filing requirements for such arrangements, which include annual Form M-1 filings and filings upon origination, have increased from $1,558 to $1,597 per day.
Adjustments also have been made to other benefits-related penalties, including those for failure to provide certain information requested by the DOL and for certain defined benefit plan compliance failures. The penalties related to 401(k) plans have been adjusted as well.
Although the affected penalties relate to a wide range of compliance issues, not all violations will give rise to the highest permitted penalty. In some instances, the DOL has discretion to impose lower penalties, such as under programs designed to encourage Form 5500 filing. Our firm can provide further information.