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HHS Increases Penalties for Inflation

All, Employee Benefits

On November 15, 2021 the Department of Health and Human Services (HHS) issued increased civil monetary penalties for HIPAA and Medicare payer violations based on inflation. These increases were based on a cost of living increase of 1.01182%.

Please note the following regarding these penalties:

HIPAA Administrative Simplification (Privacy, Security, Breach Notification)

HHS has the ability to impose penalties for HIPAA violations. These penalties have been increased to the following levels:

Tier 1 – Lack of Knowledge Standard (per violation)

  • Minimum Penalty = $120; Maximum Penalty = $60,226
  • Calendar Year Cap = $1,806,757

Tier 2 – Reasonable cause, not Willful Neglect Standard (per violation)

  • Minimum Penalty = $1,205; Maximum Penalty = $60,226
  • Calendar Year Cap = $1,806,757

Tier 3 – Willful Neglect, Corrected within 30 days Standard

  • Minimum Penalty = $12,045; Maximum Penalty = $60,226
  • Calendar Year Cap = $1,806,757

Tier 4 – Willful Neglect, Not Corrected within 30 days Standard

  • Minimum Penalty = $60,226; Maximum Penalty = $1,806,757
  • Calendar Year Cap = $1,806,757

Medicare Secondary Payer Violations

Group Health Plans are prohibited from taking into account the Medicare entitlement of a current employee or a current employee’s spouse or family member in relation to the plan. These penalties include the following:

  • Offering incentives to Medicare-eligible individuals to enroll in Medicare/not enroll in employer plan that would be primary
    • Per violation = $9,753
  • Failure to report situations in which the group health plan is primary
    • Per violation = $1,247

Summary of Benefits and Coverage (SBC)

A SBC must be provided to plan participants and beneficiaries before enrollment or re-enrollment in a group health plan. Not doing so would result in the following penalties:

  • Failure to provide SBC by insurer or health plan sponsor
    • Per failure = $1,190

Effective Date

November 15, 2021 (for violations occurring on or after November 2, 2015)

Key Takeaway

The federal HHS has increased the penalties for these compliance violations. Employers who offer group health insurance would be well-served by reviewing their plans and/or processes to make sure they remain compliant with federal regulations.

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