Employee Benefits Statutory Civil Penalties

Apr
09

Calendar Year 2019

The following summary describes the most common penalties applicable to retirement, health, and welfare plans in 2019 through ERISA and other federal laws. This list serves as an important reminder that noncompliance with laws relating to your company’s benefit plans could result in significant penalties.

ERISA Penalties.

  • Furnish Reports. Failure to furnish reports (e.g., pension benefit statements) to certain former participants and beneficiaries or maintain records: $30 per employee.
  • COBRA. Failure to provide an initial COBRA notice or an election notice on a timely basis, as required by COBRA: $110 per day.
  • Form 5500. Failure or refusal to properly file annual Form 5500 report required by ERISA § 104: Up to $2,194 per day.
  • Notification of Benefit Restrictions. Failure to notify participants under ERISA §10(j) of certain benefit restrictions and/or limitations arising under Internal Revenue Code §436: Up to $1,736 per day.
  • Notification of Automatic Contribution Arrangement. Failure to furnish automatic contribution arrangement notice under ERISA §514(e)(3): Up to $1,736 per day.
  • Form M-1. Failure of a multiple employer welfare arrangement to file report required by regulations issued under ERISA §101(g): Up to $1,597 per day.
  • Information Requested by DOL. Failure to furnish information requested by the Secretary of Labor under ERISA §104(a)(6): Up to $156 per day, not to exceed $1,566 per request.
  • Blackout Notice. Failure to furnish a blackout notice under ERISA § 101(i): Up to $139 per day.
  • Right to Divest Notice. Failure to furnish a notice of the right to divest employer securities under ERISA § 101(m): Up to $139 per day.
  • CHIP Notice. Failure by an employer to inform employees of Children’s Health Insurance Program (CHIP) coverage opportunities (each employee is a separate violation): Up to $117 per day.
  • State Coverage Coordination. Failure by a plan administrator to timely provide to any State the information required to be disclosed regarding coverage coordination under ERISA §701(f)(3)(B)(ii); each participant/beneficiary is a separate violation: Up to $117 per day.
  • GINA.
    • Failure by any plan sponsor of a group health plan, or any health insurance issuer offering health insurance coverage in connection with the plan, to meet the requirements of ERISA §§702(a)(1)(F), (b)(3), (c) or (d); or §701; or §702(b)(1) with respect to genetic information: Up to $117 per day during non-compliance period.
    • Minimum penalty for de minimis failures to meet genetic information requirements not corrected prior to notice from the Secretary of Labor: $2,919 minimum.
    • Minimum penalty for failures to meet genetic information requirements which are not corrected prior to notice from the Secretary of Labor and are not de minimis: $17,515 minimum.
    • Cap on unintentional failures to meet genetic information requirements: Up to $583,830.
  • CSEC. Failure of Cooperative and Small Employer Charity Act (CSEC) plan sponsor to establish or update a funding restoration plan: Up to $107 per day.
  • Prohibited Distribution. Distribution prohibited by ERISA §206(e): Up to $16,915 per distribution.
  • SBC Distribution. Failure to provide Summary of Benefits Coverage under Public Health Services Act §2715(f): Up to $1,156 per failure.

Multi-Employer Plans.

  • Failure of a multiemployer plan to certify endangered or critical status under ERISA §305(b)(3)(C) treated as a failure to file annual report: Up to $2,194 per day.
  • Failure to furnish certain multiemployer plan financial and actuarial reports upon request under ERISA §101(k): Up to $1,736 per day.
  • Failure to furnish estimate of withdrawal liability upon request under ERISA §101(l): Up to $1,736 per day.
  • Failure by a plan sponsor of a multi-employer plan in endangered status to adopt a funding improvement plan or a multiemployer plan in critical status to adopt a rehabilitation plan. Penalty also applies to a plan sponsor of an endangered status plan (other than a seriously endangered plan) that fails to meet its benchmark by the end of the funding improvement period: Up to $1,378 per day.

Health Care Reform.

  • Failure to offer coverage to 95% of eligible full-time employees with Minimum Essential Coverage. Penalty applies if one full-time employee receives federal premium subsidy for marketplace coverage: $2,500 per full-time employee (minus the first 30).
  • Failure to offer affordable coverage (less than or equal to 9.56% in 2018 and 9.86% in 2019) or failure to provide “minimum value” coverage (60%+ of total allowed costs): $3,750 per full-time employee receiving a subsidy or $2,500 per full-time employee (minus the first 30).
  • Failure to comply with health care reform mandates: $100 per day.
  • Failure to file a correct 1094 or 1095 or failure to file the information returns on a timely basis: $270 for each return.
  • Failure to furnish correct 1095 payee statement on a timely basis or failure to include all of the information required to be shown on a payee statement or the inclusion of incorrect information: $270 for each return.

Miscellaneous Penalties.

  • MHPAEA. Failure to comply with MHPAEA requirements: $100 per day for each individual to whom a failure relates.
  • HIPAA. Failure to comply with HIPAA: Excise tax of $100 per day for each individual to whom the failure relates; civil penalties of $100 to $50,000 per violation, capped at $1.5 million per calendar year.

This summary is not intended to be a comprehensive list of all federal penalties that could apply to an employee benefit plan. Additionally, state and local law penalties are not included in this summary.

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