Increased Civil Penalty Amounts for SBC, MSP, and HIPPA Violations

Effective March 17, 2022, the U.S. Department of Health and Human Services (HHS) has increased updated penalties that effect group health plans.


The adjusted penalty amounts apply if the SBC, MSP and HIPPA privacy and security violations occured on or after 11/15/2015

Key penalties include:

  • Summary of Benefits and Coverage (SBC): Failure to provide group health plan participants and beneficiaries with an SBC may now result in a penalty of up to $1,264 per participant or beneficiary.
  • Medicare Secondary Payer (MSP): Offering Medicare beneficiaries financial or other benefits as incentives not to enroll in or to terminate enrollment in a group health plan that would otherwise be primary to Medicare will now trigger penalties of up to $10,360.
  • HIPAA privacy and security rules: Penalties for a covered entity or business associate violating the Health Insurance Portability and Accountability Act’s (HIPAA) privacy and security rules will depend on the type of violation involved. Penalties are broken down into “tiers” that reflect increasing levels of knowledge about the violation. Each tier carries a minimum and maximum penalty with an annual cap, all of which have increased as follows:
  • Tier one: Minimum penalty $127, maximum penalty $63,973, annual cap $1,919,173
  • Tier two: Minimum penalty $1,280, maximum penalty $63,973, annual cap $1,919,173
  • Tier three: Minimum penalty $12,794, maximum penalty $63,973, annual cap $1,919,173
  • Tier four: Minimum penalty $63,973, maximum penalty and annual cap $1,919,173

Employers should become familiar with the new penalty amounts and review their benefit plan administration protocols to ensure full compliance.

Blue Chip Benefits is a full-service insurance agency that provides organizations, as well as key executives, with insurance solutions that support an organization’s overall benefits strategy and bottom line.

For more information, contact Maureen at MaureenDJ@BlueChipBG.com or call (888) 225-8244, x701

This legal update is not intended to be exhaustive, nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice. Copyright © 2022 Zywave, Inc. All right reserved.

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