By: HUB’s EB Compliance Team
The Department of Labor (“DOL”) recently released cost of living adjustments (COLA) for civil monetary penalties for 2023. The increased amounts will apply to penalties assessed after January 15, 2023. These penalties come from the Employee Retirement Income Security Act of 1974 (“ERISA”), which is the federal law that governs employee benefit plans. The adjusted penalties for 2023 that are most relevant to health and welfare plans are:
| Violation | 2022 | 2023 |
|---|---|---|
| ERISA Section 502(c)(2) - Failure to file annual returns (Form 5500s) | $2,400 per day | $2,568 per day |
| ERISA Section 502(c)(5) - Failure to file an M-1 Form (Applicable to Multiple Employer Welfare Arrangements- MEWAs) | $1,746 per day | $1,881 per day |
| ERISA Section 502(c)(6) - Failure to provide the DOL with requested documentation | $171 per day not to exceed $1,713 per request | $184 per day not to exceed $1,846 per request |
| ERISA Section 502(c)(9)(A) - Failure to provide CHIP notice to employees | $127 per employee per day | $137 per employee per day |
| ERISA Section 502(c)(9)(B) – Failure to disclose group health plan information to a state upon request | $127 per participant and beneficiary per day | $137 per participant and beneficiary per day |
| ERISA Section 502(c)(10) - Failure to comply with the Genetic Information Nondiscrimination Act (GINA) | $127 per participant and beneficiary per day | $137 per participant and beneficiary per day |
|
$3,192 | $3,439 |
|
$19,157 | $20,641 |
|
$638,556 | $688,012 |
| ERISA Section 715 and PHSA 2715(f) - Failure to issue a Summary of Benefits and Coverage (SBC) | $1,264 per day | $1,362 per day |
The increases for 2023 are significant, which is consistent with other inflation adjustments for 2023.
Employers and plan administrators should carefully review their administrative practices to ensure compliance with the provisions highlighted above. A careful review of their administrative practices, especially those associated with the distribution of notices and plan materials to participants, can help an employer or plan administrator avoid costly monetary penalties.
To access a complete list of the 2023 civil monetary penalty adjustments for DOL and its sub-agencies go here.
If you have any questions, please contact your HUB Advisor. View more compliance articles in our Compliance Directory.
NOTICE OF DISCLAIMER
Neither Hub International Limited nor any of its affiliated companies is a law or accounting firm, and therefore they cannot provide legal or tax advice. The information herein is provided for general information only, and is not intended to constitute legal or tax advice as to an organization’s or individual's specific circumstances. It is based on Hub International's understanding of the law as it exists on the date of this publication. Subsequent developments may result in this information becoming outdated or incorrect and Hub International does not have an obligation to update this information. You should consult an attorney, accountant, or other legal or tax professional regarding the application of the general information provided here to your organization’s specific situation in light of your or your organization’s particular needs.