DOL Increases Penalties for Health Plan Violations


On July 1, 2016, the Department of Labor (DOL) issued an interim final rule that increases the civil penalty amounts that may be imposed under various federal laws, including the Employee Retirement Income Security Act (ERISA). The interim final rule increases the civil penalty amounts associated with:

  • Failing to file an annual Form 5500 (as applicable);
  • Failing to provide the annual notice regarding premium assistance under the Children’s Health Insurance Program (CHIP); and
  • Failing to provide the Summary of Benefits and Coverage (SBC), as required by the Affordable Care Act (ACA).

The increased amounts apply to civil penalties that are assessed after Aug. 1, 2016, for violations that occurred after Nov. 2, 2015.

Action Steps

Employers should become familiar with the new penalty amounts and review their health plans to ensure compliance with ERISA’s requirements.  For example, employers should make sure they are complying with ERISA’s reporting and disclosure rules, including the Form 5500, annual CHIP notice and SBC requirements.


The 2015 Bipartisan Budget Act (Act) includes provisions to strengthen the civil monetary penalties under various federal laws in order to maintain their deterrent effect. The Act requires the DOL to adjust the civil monetary penalties that it administers under ERISA for inflation. This adjustment must include:

  • An initial ‘‘catch-up’’ increase to the penalty amounts, effective Aug. 1, 2016; and
  • Subsequent annual adjustments for inflation, beginning in January 2017.

Catch-up Increase

The DOL’s interim final rule implements the initial catch-up increases to ERISA’s civil monetary penalties. The increased penalty amounts will become effective Aug. 1, 2016, and may apply for any violations occurring after Nov. 2, 2015. The updated maximum penalty amounts are shown in the table below.



The excise tax for group health plan violations, including violations of the ACA’s market reforms, is not impacted by these adjustments. This excise tax is generally $100 per day, per individual, per violation, subject to certain minimum and maximum amounts.

Annual Adjustments

After the initial catch-up amounts become effective on Aug. 1, 2016, the DOL must update its maximum penalty amounts based on the Consumer Price Index each year. The first annual inflation adjustment will be allowed for 2017. The DOL is required to publish annual updates reflecting the annual increases. These updates must be published in the Federal Register by Jan. 15 of each year.