ACA 1095 PITFALL:
BAD EMPLOYEE NAME/SSN ERRORS
ACA Audit Predictors:
Bad Employee Name/SSN Errors
Relevant Blog Entries
If your recent 1094-C IRS submission response was “accepted with errors” due to employee name and SSN/TIN mismatches, you’re not alone! On paper this is an easy fix. Employers simply need to reach out to employees and get the corrected name and SSN from the employee.
Since most people recently filed their taxes, this information is readily available from their respective 1040s. If the employee has terminated, that will likely require some extra work. If the plan is self-insured, this requires even more extra work since names and SSNs for dependents are also required (if the SSN was submitted).
You may be thinking, “not my organization -we’re on top of our game.” Well, think again.
To illustrate I would like to share a recent client experience with you. Case in point – ServiceCo (name was changed to protect the innocent). ServiceCo is as close to a zero tolerant organization that I have ever seen. Given the nature of their business, everything is double, if not triple-checked. Needless to say, they were surprised to hear their submission was accepted with errors. HR quickly reached out to employees and summarized their response to us as follows:
Group 1 – Employees were actually terminated because they could not furnish a valid SSN
Group 2 – Corrected SSNs (i.e., employees provided corrections)
Group 3 – Unable to correct (names are SSNs were verified by employees)
In my humble opinion Group 3 is the most concerning as there’s ostensibly “no problem” from either the respective employee’s or the employer’s perspective (after all, the employee should know his name and SSN).
Since 2015 is a “best efforts” year, not correcting the names and SSNs should not be problematic in 2015. The 2016 reporting year is another story since “best efforts” will be a thing of the past. If the IRS opts to impose penalties, each invalid name/SSN translates into a $250 penalty.
In order to mitigate future risks employers should 1) Start validating employee names and SSNs (dependent SSNs for self-insured plans) now, 2) Continue to validate name and SSN information for new hires. In the event HR is resource-constrained this can be easily outsourced to a firm that provides dependent eligibility verification services, such as HR Best Practices.
Employers have the opportunity to ensure employee names and SSNs are valid and future penalties. As they say, “there’s no time like the present – do it now!”
- H. Gerver 7/27/16