Compliance FYI: DOL Adjusts ERISA Penalties for Inflation
Background: Department of Labor Audits
In 2012, the Department of Labor announced a renewed commitment to increase the number of ERISA compliance audits it conducts each year. Since that time, the Employee Benefits Security Administration (EBSA) has increased their staff and the number of audits they perform each year has been on the rise.
During an audit, the DOL will review requirements related to laws such as ERISA, HIPAA, and the Affordable Care Act. For example, the DOL will verify that a summary plan document exists, wellness plans comply with HIPAA, and that special enrollment rights have been provided to employees when appropriate.
ERISA rules are enforced by the EBSA, which has the authority to issue monetary penalties to organizations which are out of compliance.
Penalties assessed after January 15, 2020 for violations which occurred after November 2, 2015 will be at the newly published rates.
One minor but important change resulting from the Inflation Adjustment Act is the requirement that the penalties for ERISA non-compliance are adjusted annually for inflation. This is designed so that monetary penalties continue to serve as a deterrent to employers.
The increase in penalties reinforces the importance of remaining compliant with ERISA rules. With increased audits by the EBSA, now is a good time to review your plans to make sure you are in full compliance.
Reach out to your M3 Account Executive for additional guidance on this topic or more information on specific ERISA penalty statutes, including violations subject to penalty and penalty amounts.