HHS Announces Inflation Adjustments to Civil Monetary Penalties
August 28, 2024
HHS recently announced inflation-adjusted penalty amounts related to violations of Summary of Benefits and Coverage (SBC), Medicare Secondary Payer (MSP), and HIPAA privacy and security rule requirements. These new penalty amounts are calculated based on a cost-of-living increase of 1.03241% and are applied to penalties assessed on or after August 8, 2024, 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 has increased from $1,362 to $1,406 per failure.
Medicare Secondary Payer (MSP) Rules
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 has increased from $11,162 to $11,524.
In addition, 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 has increased from $1,428 to $1,474.
HHS Administrative Simplification
The HIPAA administrative simplification regulations provide standards for privacy, security, breach notification, and electronic healthcare transactions to protect the privacy of individuals' health information.
The penalty amounts vary depending on a violator’s level of culpability and are broken down by HIPAA's four-tiered penalty structure, as summarized in the following chart:
| Level of Violation |
Effective for Penalties Assessed on or After August 8, 2024 |
Previous Penalty Amounts |
| |
Min |
Max |
Calendar
Year Cap |
Min |
Max |
Calendar
Year Cap |
| Lack of knowledge |
$141 |
$71,162 |
$2,134,831 |
$137 |
$68,928 |
$2,067,813 |
| Reasonable cause and not willful neglect |
$1,424 |
$71,162 |
$2,134,831 |
$1,379 |
$68,928 |
$2,067,813 |
| Willful neglect, corrected within 30 days |
$14,232 |
$71,162 |
$2,134,831 |
$13,785 |
$68,928 |
$2,067,813 |
| Willful neglect, not corrected |
$71,162 |
$2,134,831 |
$2,134,831 |
$68,928 |
$2,067,813 |
$2,067,813 |
With this latest increase in penalties, employers should review their compliance with SBC, MSP, HIPAA, and 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 2024