Annual open enrollment is always a complicated time for benefits teams…. Questions abound: Is the coverage offered legally compliant? What is the latest and greatest notice that must be included in the annual open enrollment package? Have the rules changed regarding how we send the notices?
Well, this year is no different. With the advent of the employer mandate’s enforcement, there are many new requirements that benefits and HR teams are grappling with to ensure compliance. We wanted to take a moment to post a specific reminder about collecting social security numbers for self-insured plans providing minimum essential coverage.
As you are likely aware, self-insured plans will need to begin the onerous reporting process to comply with Code Sections 6055 and 6056 beginning in Q1 2016. But, what may have slipped off your radar is that these reporting rules require reporting of an individual’s taxpayer identification number (“TIN”). If a person has an SSN, that is his or her TIN. If a person does not have an SSN, he or she might instead have an Individual TIN (“ITIN”), which is a nine-digit number issued by the IRS to individuals who are required for U.S. tax purposes to have an identification number but who do not and are not eligible for an SSN. In some cases, an alien dependent may have an Individual TIN because a parent is claiming the dependent as a tax dependent on a U.S. tax return. Also, some alien spouses may have ITINs.
To comply with large employer reporting for a self-insured plan, you need to provide the TIN of each full-time employee; there are no exceptions. With respect to the minimum essential coverage reporting, you must take reasonable efforts to collect the TINs of an employee’s covered spouse or dependents. If these individuals do not have a TIN or you cannot obtain it after making reasonable efforts, the rules allow you to report the date of birth of the individual.
Reasonable efforts are defined in the final rules issued earlier this year. Generally, in order to comply with early 2016 reporting, the IRS will consider the following efforts reasonable:
- solicit information by December 31, 2014, and if not provided at that time;
- make a second solicitation by December 31, 2015;
- assuming the second request is also unsuccessful, use the date of birth in place of a TIN for the individual in question for Q1 2016 reporting; and
- make one additional solicitation by December 31, 2016.
One additional point – reporting a date of birth in one year does not eliminate the need to make reasonable efforts to obtain a TIN in the future.
During the current annual open enrollment period for self-insured plans, you should take the opportunity to collect SSNs from all covered/enrolled individuals.