New reporting requirements for group health plans

Employers who sponsor group health plans, and certain other responsible persons, must self-report and pay excise taxes when they fail to comply with various group health plan mandates. Prior to these new regulations, taxes applied, but there was no imposed obligation to self-report. 

This new reporting obligation applies to violations of many regulatory requirements. Examples of affected requirements include: COBRA, GINA, HIPAA (portability, access and renewability provisions; nondiscrimination based on health status), Mental Health Parity, Michelle's Law (coverage for dependent students who would otherwise lose eligibility due to medically necessary leave of absence) and Newborn's and Mother's Health Protection Act (minimum hospital stays for maternity).

Use IRS Form 8928, which is due by the deadline for filing the federal income tax return for the taxable year, with no extensions.

Amount of tax

  • Generally, the tax is $100 per day for each day in the "noncompliance period" for each affected individual. The noncompliance period begins on the day the failure first occurred and ends on the day the failure was corrected
  • Maximum tax for unintentional failures:
    • If failure to report is due to reasonable cause and not willful neglect, the maximum tax is the lesser of $500,000 or 10% of aggregate amount paid or incurred by the employer during preceding taxable year for group health plans.
    • If failure is intentional, there is no cap on the amount of tax imposed.
    • Tax may be waived if you can show the IRS:
    • You didn't know, and in exercising reasonable diligence would not have known, that the failure existed.
    • Failure is due to reasonable cause and not willful neglect, and failure is corrected within a 30-day period beginning on the first date you knew (or in exercising reasonable diligence would have known) that the failure existed. Correction requires placing the affected individuals in the same or better position as if the failure had not occurred.
    • All or part of the tax could be waived to the extent the tax would be excessive relative to the failure.

    A portion of the law also covers comparable employer contributions for HSAs or Archer MSAs; different rules apply.