August 8, 2011

Extension for Self-Reporting of Welfare Benefit Plan Violations

For the past two years, it has been incumbent upon employers sponsoring group health plans, as well as certain other responsible entities, such as insurers or third party administrators, to self-report certain welfare benefit plan violations (see Welfare Benefit Plan Violations: Self-Reporting Required from the November 2009 Benefit Beat).  Such violations would include those relating to:

  • COBRA;
  • HIPAA portability, access and renewability provisions;
  • Discrimination based on a health factor, including genetic information;
  • Mental health parity rules;
  • Minimum hospital lengths of stay in connection with childbirth;
  • "Michelle's Law";
  • Comparable employer contributions to health savings accounts and Archer MSAs; and
  • Health care reform laws (Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act). 

Plans that fail to satisfy any of the above requirements would be deemed to be in violation, and could be subject to an excise tax of $100 per day per affected individual. The employer or other responsible entity is required to self-report any violations of these provisions on the Form 8928, Return of Certain Excise Taxes Under Chapter 43 of the Internal Revenue Code.  Failure to self-report a violation can result in penalties, which can be as much as 25% of the tax due, as well as interest.

On June 24, 2011, the IRS issued final regulations that provide for an automatic 6-month extension of time for filing the Form 8928.  To receive the extension, the employer, or other responsible entity, must complete a Form 7004, ‘Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns.  The Form 7004 must be filed on or before the due date of the Form 8928, together with a payment of the estimated unpaid tax liability.  An automatic extension of time for filing a return does not extend the time for payment of any tax due on such return.

The automatic extension provision is applicable to Form 7004s filed on or after June 24, 2011.


The information contained in this Benefit Beat is not intended to be legal, accounting, or other professional advice, nor are these comments directed to specific situations.

As required by U.S. Treasury rules, we inform you that, unless expressly stated otherwise, any U.S. federal tax advice contained in this Benefit Beat is not intended or written to be used, and cannot be used, by any person for the purpose of avoiding any penalties that may be imposed by the Internal Revenue Service.


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