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2021 Adjustments to HIPAA Penalties and More

At the end of November, the Department of Health and Human Services (HHS) announced inflation adjustments for HIPAA penalties and a few others. Group health plan sponsors and other entities who violate any rules of HIPAA will see a penalty increase of 1.182%.

HIPAA is broken down into four tiers of violations, categorized by level of culpability, with minimum and maximum penalty amounts for each and an annual cap for multiple breaches of an identical HIPAA provision. We've outlined these changes for you:

Minimum Penalties

2021

2020

No Knowledge

$120

$119

Reasonable Cause

$1,205

$1,191

Willful Neglect – Corrected*

$12,045

$11,904

Willful Neglect - Not Corrected

$60,266

$59,522

 

Maximum Penalties

2021

2020

No Knowledge

$60,266

$59,522

Reasonable Cause

$60,266

$59,522

Willful Neglect – Corrected*

$60,266

$59,522

Willful Neglect - Not Corrected

$1,806,757

$1,785,651

*Corrected within 30 days

 

The calendar-year penalty cap is also increasing to $1,806,757 (previously $1,785,651).

Here are the penalty caps under the enforcement discretion:

Culpability

Annual Limit*

No Knowledge

$25,000

Reasonable Cause

$100,000

Willful Neglect - Corrected

$250,000

Willful Neglect - Not Corrected

$1,500,000

 *Amounts do not reflect indexing

 

More Penalties…

Gavel on top of stacks of coins

Affordable Care Act (ACA)
  • Summary of Benefits Coverage (SBC): SBCs must be provided to participants and beneficiaries prior to enrollment/re-enrollment in a group health plan. The new maximum penalty for each failure to provide SBCs is now $1,190 (previously $1,176)
  • Medical Loss Ratio (MLR) Rules: Maximum penalty increased from $118 to $119
Medicare Secondary Payer (MSP) Rules

The MSP statute prevents a group health plan from "taking into account" the Medicare entitlement of a current employee or dependent and assesses penalties for violations. Essentially meaning, the Medicare program does not have primary payment responsibility, and entities that bill Medicare must first verify whether Medicare is the primary payer for the specific items or services. Penalties for violations of certain MSP rules are increasing as follows:

  • Prohibition against financial or other incentives: Max penalty for each eligible individual offered financial or other incentives not to enroll in a group health plan that would be primary to Medicare is increasing to $9,753, from $9,639
  • Nondisclosure: For each failure by an insurer, a third-party administrator, or a self-insured/self-administered group health plan's fiduciary to inform HHS about situations in which the plan is or was primary to Medicare, the maximum daily penalty is now $1,247, up from $1,232

Please note that these adjustments are effective for penalties assessed on or after November 15, 2021, for violations on or after November 2, 2015.

In Other News...

On December 21, 2021, the IRS released Notice 2022-4 which announced $2.79 as the adjusted applicable amount for the Patient-Centered Outcomes Research (PCOR) Fees. This applies to policy or plan years that ended on or after October 1, 2021, and before October 1, 2022. This is an increase from the previous amount of $2.66.

We’re seeing a lot of changes coming into 2022. Make sure you’re always in the know! Follow us on LinkedIn, Facebook, Twitter, and YouTube for more updates.