Applicable large employers, and small employers with self-funded medical plans, will be providing information to employees about their offer of health coverage. Notices to employees will be furnished on Form 1095-C for most employers, and reporting to the IRS will be accomplished through Form 1094-C.
The forms require employers to report a Social Security Number (or TIN) for the employee and each covered individual. While employers typically have an SSN for an employee, they may not have a SSN for a covered dependent.
Employers will be subject to penalties if they submit incomplete or incorrect reporting under health care reform. The IRS can impose a penalty of up to $250 per return, with a maximum penalty of $3,000,000 per year. While penalties may be waived if an employer can show “reasonable cause” for a failure, the IRS does set out specific steps that must be followed to be able to claim reasonable cause with respect to obtaining a SSN.
IRS regulations require that an employer make three attempts to obtain an individual’s SSN.
- An an initial request for the number at the time the relationship with the individual is established (when individual first becomes eligible for coverage).
- A second request for the number by December 31 of the year in which the relationship with the individual begins (January 31 of the following year if the relationship begins in December).
- A third request for the number by December 31 of the following year.
Any request that is made by mail must include a Form W-9 and a self-addressed return envelope. Postage pre-paid is not required. Telephone requests must be made to an adult member of the household and the employer must keep a record of the phone call. In either case, the individual must be informed that he or she will be subject to a $50 penalty by the IRS if he or she fails to provide a TIN.
Employers should be certain to follow the rules described above to be eligible to claim reasonable cause for not using a TIN on the health care reform filings.
