HHS Workforce Reduction: What It Means for HIPAA and ERISA Compliance

The White House has recently announced  that  HHS is reorganizing and will reduce its workforce by 20,000 employees. This is in addition to the reported recent budget cuts to the Employee Benefits Security Administration and you’re probably wondering, “What does this mean for me?” 

We’re here to break it all down so you’re not left flying blind.  

Spoiler alert—just because agencies are reducing their workforces doesn’t mean compliance is optional.  

The Big Shake-Up at HHS  

The Department of Health and Human Services (HHS) is undergoing a major reorganization with a significant reduction in staff. What does this mean for HIPAA enforcement? Let’s unpack it.  

What Does HHS Enforce?  

One of HHS’s key roles is enforcing laws like HIPAA, HITECH, and other regulations tied to health information and discrimination. This is primarily handled by its Office for Civil Rights (OCR).  

Does This Mean HIPAA Enforcement Is Going Away?  

Short answer? No.  

While HHS may have fewer people to conduct investigations, the remaining staff will likely focus on being hyper-strategic and relentless in their enforcement efforts. Why? They’ll need to justify their budget and make their work impactful with fewer resources.  

For HR professionals and brokers, this means a few things: 

• HIPAA is still the law of the land. No budget cuts or restructuring change that fact.  

• Compliance is just as important as before. Investigations may be fewer but may be  more intense.  

• Now is not the time to take your foot off the gas when it comes to protecting personal health information.  

What’s Happening at EBSA? (Hint: It’s Shrinking Too)  

The Employee Benefits Security Administration (EBSA), part of the Department of Labor (DOL), enforces Title I of ERISA and publishes compliance assistance. But EBSA is feeling the pinch too, with budget cuts affecting its operations.  

ERISA and MHPAEA Enforcement  

One key area to watch is the enforcement of the Mental Health Parity and Addiction Equity Act (MHPAEA), which is the responsibility of EBSA. With reductions in EBSA, group health benefit plans aren’t off the hook with the MHPAEA. Courts can and will enforce them. This also means you’re likely to see more litigation by plan participants trying to enforce their rights under MHPAEA.  

“Plain Language Staff” Eliminations  

EBSA’s “plain language” staff, who provided clear and accessible compliance guidance, have been cut. Translation? If you were relying on EBSA’s straightforward compliance materials, you might need to look elsewhere—like to compliance experts (hey, that’s where we come in!).  

The Ripple Effect for HR Pros and Brokers  

Here’s a quick recap of what all this means for you as an HR professional or broker:

1. Don’t Assume Less Enforcement = No Consequences for Noncompliance 

• Regulatory agencies may have reduced budgets and personnel, but non-compliance still puts you at risk for audits, lawsuits, and reputational damage. 

• As consumer decision making may shift based on inflation, organizations are becoming more concerned with reputational brand (e.g. a brand’s reputation is going to become even more important).   

2. Litigation Risks Likely to Rise: Attorneys Fees Defending Claims Gets Expensive  

Budget cuts at enforcement agencies may lead to an increase in private litigation—think employees or members enforcing their rights directly through the courts. 

• While ERISA does not allow for punitive damages, reasonable attorneys fees at the discretion of the court are available.  

• Remember, ERISA does allow for class actions.  

• With the increase of grey areas due to a possible decrease in enforcement, an increase of frivolous lawsuits may be expected.  Maintaining a tight compliance program keeps them frivolous.   

3. Compliance Just Got Harder to Navigate Solo  

With fewer resources dedicated to compliance education and guidance, you’ll need to lean on trusted partners to stay out of trouble.  

What’s the Bottom Line? 

While the enforcement landscape for HIPAA and ERISA is shifting, compliance is still a top priority. Fewer inspectors and scaled-back budgets don’t mean these laws disappear—the legal landscape is just evolving. Stay ahead of the curve, focus on proactive measures, and don’t hesitate to seek out resources and tools to protect your organization.