In January 2025, the U.S. Department of Labor (DOL) released its annual inflation adjustments for civil monetary penalties associated with health and welfare plan violations. Under legislation enacted in 2015, these penalty amounts must be updated each year by January 15. This time, the DOL released the adjustments ahead of schedule by five days.
The new penalty amounts apply to violations assessed after January 15, 2025. Below are some key penalties to be aware of:
Increased Penalties for Common Violations
Late Filing of Form 5500
Employers must file Form 5500, “Annual Return/Report of Employee Benefit Plan,” each year for most plans governed by the Employee Retirement Income Security Act (ERISA). This form provides the IRS and DOL with essential details about a plan’s operation and compliance.
- New penalty: $2,739 per day for late filings (up from $2,670 in 2024).
Failure to Provide a Summary of Benefits and Coverage (SBC)
Under the Affordable Care Act (ACA), employers are required to provide an SBC to eligible employees. This document gives a clear, concise breakdown of a health or welfare plan’s coverage and costs.
- New penalty: $1,443 per failure (up from $1,406 in 2024).
Violations of the Genetic Information Nondiscrimination Act (GINA) & CHIP Requirements
Employers may face penalties for:
- Establishing eligibility rules based on genetic information.
- Requesting genetic data for underwriting.
- Failing to disclose Medicaid or CHIP assistance availability.
- New penalty: $145 per participant per day (up from $141 in 2024).
Failure to Meet Multiple Employer Welfare Arrangement (MEWA) Reporting Requirements
A MEWA is a benefits plan covering employees of two or more unrelated employers. MEWAs must comply with strict reporting requirements, including the filing of Form M-1.
- New penalty: $1,992 per day (up from $1,942 in 2024).
Other Adjusted Penalties
Additional penalties related to health and welfare plan compliance have also increased, including:
- Failure to provide DOL-requested documents:
- $195 per day (up from $190 in 2024), with a maximum penalty of $1,956 per request.
Minimizing Penalty Risk
While penalty amounts continue to rise due to inflation, not all violations result in maximum fines. The DOL has discretion in imposing penalties and may offer reduced fines in certain cases, such as under voluntary compliance programs for late Form 5500 filings.
Stay Compliant & Avoid Costly Mistakes
To ensure compliance and reduce potential penalties:
- File required forms on time.
- Review employee disclosures to meet ACA and ERISA guidelines.
- Stay up to date on MEWA and CHIP reporting requirements.
- Consult with experts to minimize compliance risks.
For guidance on navigating these 2025 penalty updates and ensuring health and welfare plan compliance, contact us today.
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