HHS Announces Adjustments to Penalties for SBC, MSP, and HIPAA Violations
HHS recently announced inflation-adjusted penalty amounts related to Summary of Benefits and Coverage (SBC), Medicare secondary payer (MSP) and HIPAA privacy and security rules violations. These new penalty amounts are calculated based on a cost-of-living increase of 1.01182%. The new amounts are applied to penalties assessed on or after November 15, 2021, for violations occurring on or after November 2, 2015.
Summary of Benefits and Coverage (SBC)
The ACA requires insurers and group health plan sponsors to provide SBCs to eligible employees and their beneficiaries before enrollment or re-enrollment in a group health plan. The maximum penalty for a health insurer or plan’s failure to provide an SBC increased from $1,176 to $1,190 per failure.
Medicare Secondary Payer (MSP) rules
- Penalty on financial incentives to discourage enrollment in a group health plan. The MSP provisions prohibit employers and insurers from offering Medicare beneficiaries financial or other benefits as incentives to waive or terminate group health plan coverage that would otherwise be primary to Medicare. The failure to comply with the MSP rules increased from $9,639 to $9,753.
- Penalty on failure to disclose to HHS when a plan is primary to Medicare. The maximum daily penalty for the failure of an insurer, self-insured group health plan or a third-party administrator to inform HHS when the plan is or was primary to Medicare increased from $1,232 to $1,247.
HHS Administrative Simplification
The HIPAA administrative simplification regulations provide standards for privacy, security, breach notification and electronic health care transactions to protect the privacy of individuals’ health information.
The penalty amounts vary depending on the violators’ level of intentions and situations broken down by HIPAA’s four-tiered penalty structure. The below chart summarizes the new and prior penalty amounts.
| Effective |
Eff. November 2021 (New) |
Prior Amounts (Old) |
|
Min |
Max |
Calendar year Cap |
Min |
Max |
Calendar year Cap |
| Lack of knowledge |
$120 |
$60,226 |
$1,806,757 |
$119 |
$59,522 |
$1,785,651 |
| Reasonable cause and not willful neglect |
$1,205 |
$60,226 |
$1,806,757 |
$1,191 |
$59,522 |
$1,785,651 |
| Willful neglect: corrected within 30 days |
$12,045 |
$60,226 |
$1,806,757 |
$11,904 |
$59,522 |
$1,785,651 |
| Willful neglect: not corrected |
$60,266 |
$1,806,757 |
$1,806,757 |
$59,522 |
$1,785,651 |
$1,785,651 |
With this latest increase in penalties, employers may want to review their compliance on SBC, MSP and HIPAA along with other employee benefits compliance requirements to help prevent agency audits and potential penalties.
HHS, Adjustment of Civil Monetary Penalties for Inflation and the Annual Civil Monetary Penalties Inflation Adjustment for 2021 »