ACA Section 7 refers to part of the Employee Retirement Income Security Act (ERISA) that deals with reporting and disclosure requirements for employee benefit plans, including health plans. Violations of ACA-related provisions under Section 7, as part of group health plan reforms, can lead to several significant consequences.
Possible Consequences of Violations of ACA Section 7 for Health Plans
- Excise Taxes and Penalties: There is a common excise tax of $100 per day, per individual affected by a violation, with a potential maximum penalty reaching up to $1.5 million annually for some violations related to ACA group health plan reforms. This applies to failures such as not providing required coverage, offering discriminatory benefits, or not meeting other ACA mandates for group plans.
- Penalties for Reporting Failures: Employers and plan sponsors must comply with ACA reporting requirements (e.g., Sections 6055 and 6056 related to health coverage reporting to the IRS). Failing to accurately file or provide this information can result in penalties starting at $50 per failure, increasing to $270 or more for intentional disregard, with potential aggregate penalties of millions of dollars annually.
- Penalties for Non-compliance with Coverage Rules: For example, not covering adult children up to age 26, imposing lifetime or annual limits on essential health benefits, or not providing required preventive care without cost-sharing could trigger penalties.
- Employer Shared Responsibility Penalties: Applicable Large Employers (ALEs) that fail to offer affordable, minimum value coverage to full-time employees face monthly penalties based on the number of employees receiving premium tax credits. For 2024, this includes penalties of $2,970 or $4,460 per employee annually (pro-rated monthly) depending on the violation.
- Other Civil Penalties: Failure to provide the Summary of Benefits and Coverage (SBC) document on time can invoke penalties up to $1,156 per violation. Other violations, like offering prohibited employer payment plans or discriminatory benefits, may result in $100 per day per person penalties.
Summary
In essence, violations of ACA Section 7 provisions within health plans can lead to substantial financial penalties, excise taxes, and reporting-related fines. These consequences vary based on the specific ACA requirement violated, the nature of the non-compliance (e.g., accidental vs. intentional), and the number of individuals affected by the violation.
This highlights the importance for employers and health plan sponsors to maintain strict compliance with ACA rules to avoid costly penalties.
