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Employers face ACA Social Security number reporting snarl

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The National Association of Health Underwriters is asking the Internal Revenue Service to be realistic about employers’ ability to get accurate Social Security numbers for employees’ and employees’ dependents.

The IRS has proposed tough new Social Security number verification requirements for self-insured employers for 2016.

NAHU, a Washington-based group that represents health insurance agents and other health benefits advisors, says the IRS should phase in the requirements, especially for employers that buy coverage from insurers.

Otherwise, if the IRS tries to adopt draft rules as is, and apply the rules to fully insured employers as well as self-insured employers, complying with the rules “would be impossible for many, if not all” fully insured employers, according to Janet Stokes Trautwein, NAHU’s chief executive officer.

Employers that operate their own self-insured health plans tend to have more accurate Social Security number records than fully insured employers do, Trautwein writes in a letter sent to the IRS.

Trautwein says the IRS can solve the problem for 2016 by letting both fully insured and self-insured meet a flexible “good-faith” compliance standard for Social Security numbers for 2016. The IRS also needs to publish clear Social Security number accuracy verification procedures and deadlines for 2017 and later years, she writes.

Trautwein included those comments in a response to a draft rule the IRS published in August.

Related: IRS fills ACA health coverage information holes

The IRS is developing new Social Security accuracy standards to improve the way it applies Affordable Care Act coverage information reporting rules.

The ACA employer shared responsibility requirement, described in Internal Revenue Code Section 4980H, now requires many employers to offer affordable coverage with a minimum value or else pay a penalty.

Another ACA-related tax law, Internal Revenue Code Section 6056, requires employers to report on the health benefits they provide. Affected employers put the Section 6056 reports on IRS Form 1095-C.

A third ACA provision, Internal Revenue Code 6055, requires insurers and self-insured employer health plans to report on the coverage their products provide. Insurers and small self-insured plans put their Section 6055 reports on Form 1095-B. Large self-insured employers can meet the Section 6055 requirements by putting benefits information on Form 1095-C.

To meet the ACA information requirements, employers are supposed to provide Taxpayer Identification Numbers, or TINs, for employees and dependents. For most of the employees, the TINs are the same as the Social Security numbers.

When employers filed their 1095-C forms for 2015, the IRS assumed that a fairly high percentage of the Social Security numbers provided would be wrong. The IRS told the employers their filings were “accepted with errors,” Trautwein writes.

The IRS also told the employers with Social Security number errors that IRS regulations do “not require you to file corrected returns for missing or incorrect TINs if you meet the reasonable cause standard,” Trautwein writes.

The draft rule released in August “outlines a much more exhaustive standard regarding TIN solicitation from covered individuals,” Trautwein writes.

Trautwein notes that the current draft rule appears to apply only to the information notices sent by the self-insured employers subject to Internal Revenue Code Section 6055.

“Employers need to know if a similar process will apply for TIN solicitation relative to IRC Section 6056 as soon as possible,” Trautwein writes.

For a self-insured employer that has to meet both the Section 6055 and Section 6056 standards, linking the Social Security number accuracy for both types of information reporting seems to make sense, she writes.

But the number of fully insured employers that have to meet the Section 6056 requirements is much bigger than the number of self-insured employers that have to meet the Section 6055 requirements, and the fully insured employers might not have an easy time meeting the proposed IRS standards, she says.


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