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Health Insurance Fines: ACA and ERISA

Ella Baker
Health Insurance Fines: ACA and ERISA
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Published on Aug 9
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Federal enforcement efforts are increasing the number of fines issued

Noncompliance with group health plan mandates, particularly the Affordable Care Act (ACA) and the Employee Retirement Income Security Act (ERISA), can leave you in hot water with the federal enforcement agencies tasked with overseeing these mandates. The potential fines resulting from noncompliance can be damaging to your company’s bottom line. Protect your business and your employees by ensuring that your company remains compliant with both ACA and ERISA rules.

ACA violations

For employers with 50 or more full-time equivalent employees, the ACA’s employer shared responsibility provision requires the employer to offer either minimum essential coverage that is affordable and that provides minimum value to all full-time employees and their dependents. Commonly referred to as the ‘employer mandate’ or the ‘pay or play rule’, this mandate also requires these employers to meet specific reporting responsibilities to both employees and the IRS.

Since 2018 will be the first year that the Internal Revenue Service (IRS) will begin issuing penalty letters for ACA violations to employers, there is no historical data on common violations. However, the typical violations that the IRS is expected to begin issuing include:

  • Failure to offer minimum essential coverage
  • Failure to offer minimum essential coverage that provides minimum value
  • Failure to file correct information returns
  • Failure to furnish correct payee statements

Penalties for violation may be significant. Depending on the specific violation and the plan year in which it occurred, penalties could range from $2,080 to $3,480 per affected employee.

ERISA violations

ERISA does not make group health insurance plan coverage mandatory. Once your company chooses coverage to employees, ERISA provides stipulations for how the group health insurance plan is to be administered.

The guidelines established by ERISA set standards regarding:

  • Your conduct as the plan administrator
  • The funding of the plan
  • Any potential discrimination in the distribution of plan benefits
  • The standards for filing insurance claims and appeals
  • The need to disclose plan information to participants
  • Accountability standards for documentation and reporting

One of the most common violations of ERISA is failing to give a plan participant a Summary Plan Description and other documents within 30 days of an employee’s request. Failure to do so can result in a penalty of $110 per day for each request. With these high penalties at stake, it is best to not risk your company’s financial health by not following ERISA rules.

Federal enforcement ramp-up

The federal government and the departments responsible for ensuring compliance with the ACA and ERISA have recently begun ramping up efforts to investigate potential violations of these two acts. With the IRS and Department of Labor (DOL) looking closer at employers, the need to ensure your company’s compliance has never been greater.

At the end of 2017, the IRS announced that it had finished gathering and reconciling information to begin issuing penalty letters for ACA violations. These letters, Letter 226J, will cover any ACA violations from 2015 to the present. With nearly half of required businesses reporting that they are not confident in their ability to satisfy ACA requirements, the IRS is expected to issue millions of dollars in penalty assessments.

In early 2018, the DOL announced increased penalties for employee benefit plans under ERISA. The increase applies to penalties involving employee benefit reporting and disclosure failings for violations occurring after November 2015 for which penalties were assessed after January 2018. The DOL’s ramped up enforcements has led to a 72 percent increase in ERISA fines levied, totaling $1.1 billion in 2017.

Avoiding fines with a partner like Sheakley

The best way to avoid penalties for ACA and ERISA violations is to work with a trusted partner who can administer your plan in a manner that ensures compliance on every level. Sheakley’s HR Outsourcing and PEO experts have the experience and knowledge to help you offer compliant coverage to your employees and to ensure proper reporting and notifications.

Offering a group health insurance to your employees is easier and more affordable than you may think. Sheakley’s HR Outsourcing and PEO experts can help you identify the right health insurance benefits for your company and employees and manage the enrollment process for you, while keeping you compliant with ACA and ERISA.

Schedule your free consultation with a Sheakley PEO professional today. Stay up-to-date on all things Sheakley by subscribing to our blog and following us on social media. Join in the discussion by commenting below.


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