Penalties increase for group health plan violations

The U.S. Department of Health and Human Services has increased a number of penalties affecting group health plans. The following penalties went into effect on Nov. 15:

• Summary of Benefits and Coverage (SBC): Failure to provide group health plan participants and beneficiaries with an SBC can result in a penalty of up to $1,190 per participant or beneficiary.

• Medicare Secondary Payer (MSP): Violating a prohibition on offering Medicare beneficiaries financial or other benefits as incentives not to enroll in or to end enrollment in a group health plan that would otherwise be primary to Medicare can trigger penalties of up to $9,753.

• HIPAA privacy and security rules: Penalties for a covered entity or business associate violating Health Insurance Portability and Accountability Act’s (HIPAA) privacy and security rules depend on the type of violation involved. Penalties are broken down into tiers based on increasing levels of knowledge about the violation. Each tier carries a minimum and maximum penalty with an annual cap, all of which are increasing:

  • Tier one: Minimum penalty $120, maximum penalty $60,226, annual cap $1,806,757.

  • Tier two: Minimum penalty $1,205, maximum penalty $60,226, annual cap $1,806,757.

  • Tier three: Minimum penalty $12,045, maximum penalty $60,226, annual cap $1,806,757.

  • Tier four: Minimum penalty $60,226, maximum penalty and annual cap $1,806,757.

Employers are encouraged to become familiar with the new penalty amounts and review their benefit plan administration protocols to ensure full compliance.