HHS Confirms HIPAA Penalties Will Not Be Adjusted for Inflation This Year
This week, the Department of Health and Human Services (HHS) has confirmed via the Federal Register that it will not be applying an annual inflation multiplier in 2026 and will continue to use the civil monetary penalty levels for 2025.
The Federal Civil Penalties Inflation Adjustment Act of 1990, later amended by the Federal Civil Penalties Inflation Adjustment Act Improvement Act of 2015, requires federal agencies to apply annual increases to their penalty structures in line with inflation to ensure that civil monetary penalties continue to serve as an effective deterrent. The annual inflation multiplier is set by the Office of Management and Budget (OMB).
With respect to HIPAA, penalties were established by the HITECH Act of 2009, which set a maximum penalty of $1,500,000 per violation, per year. Were it not for the annual increases, the penalty amounts would become less effective over time. Currently, the maximum penalty for a HIPAA violation is $2,190,294, an increase of 46% from the level set by the HITECH Act 17 years ago.
The decision was not made by the HHS; rather, it is due to the lengthy government shutdown last Fall. As a result of that extended shutdown, the Bureau of Labor Statistics (BLS) was unable to produce the necessary data to calculate an inflation multiplier for 2026. The government shutdown occurred due to partisan deadlock in Congress, which resulted in a lapse in fiscal year 2026 appropriations ahead of the October 1 deadline. The Bureau of Labor Statistics was unable to produce the necessary Consumer Price Index (CPI-U) data for October 2025, which is required to calculate the 2026 cost-of-living adjustment multiplier. The OMB Director issued a memorandum in April 2026, informing federal agencies that the annual inflation adjustment for 2026 had been cancelled, and federal agencies should continue to use their current penalty structures.
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The HHS Office for Civil Rights has been pushing Congress to increase the civil monetary penalties for HIPAA violations from the levels set by the HITECH Act. While the lack of an inflation adjustment this year may weaken the deterrent effect, the inflation multiplier for 2027 will take into account the cost-of-living increases from 2025 to 2027.
