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$100-A-Day Penalties: PPACA Non-compliance Can Be Expensive

Posted in Plan Administration, Welfare Plans

While a lot of employers are focused on the penalties associated with not offering appropriate coverage (the $2,000 penalty) or not offering affordable coverage (the $3,000 penalty), what can get overlooked is the myriad of “daily” penalties that come with non-compliance. Take the October 1 exchange notice requirement as an example. While the regulations do not identify a specific penalty for failing to comply with the notice requirement, PPACA has a $100 a day general “non-compliance” penalty. This general penalty requires employers to correct compliance failures within 30 days of discovery or self-report a $100 a day penalty for failing to comply on IRS Form 8928 for each day the employer failed to comply with a PPACA mandate. So failing to provide notices can get expensive.

Some other $100-a-day-penalties:

  1. Violating the non-discrimination rules (when they are finally written for insured plans)
  2. Violating the limits restrictions
  3. Failing to extend coverage to dependents to age 26
  4. Having retroactive rescission of benefits
  5. Failing to cover preventative care
  6. Failing to have a revised appeal process (including external appeals)
  7. Failing to provide timely notices
  8. Violating the restrictions on emergency room visits
  9. Violating restrictions on designation of primary care physicians
  10. Improper pre-existing condition exclusions
  11. Having excessive out-of-pocket costs
  12. Violations of the 90-day waiting period limit

Employers who simply assume that an insured plan complies with these requirements, or who assume that their self-funded plan already complies could find themselves in a sticky (and costly) situation if an audit reveals they have failed to comply.  This is particularly the case now that they are required to self-report penalties.  Both the IRS and the DOL could be involved, causing serious headaches.  Offering a health plan is costly enough without having potential penalties add to that burden.

The solution is to sit down with your plan and go line by line, requirement by requirement, and make sure your plan does not have any violations.  Even though there is an extension on the employer mandate, there is no extension on offering a compliant plan if you have a plan.  So get with your professionals and get the answers.  Don’t let the $100-a-day-penalties catch you by surprise.