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Pursuant to IRC section 6055 (which we have explored in further detail in this post), every provider of minimum essential coverage (“MEC”) will be required to report coverage information to the IRS and provide a statement to individuals (via Forms 1094-B and 1095-C) to help administer compliance with the individual mandate. In order to comply with the MEC reporting requirements, employers with self-funded group health plans, as well as insurers, are required to make a “reasonable effort” to obtain the Social Security Numbers (“SSNs”) for all covered individuals so that the IRS may verify an individual’s coverage without the need to contact the individual.

The IRS has stated that a provider of MEC will not be subject to a penalty if it can demonstrate that it properly solicited the SSN but did not receive it. Employers with self-insured plans should ensure they meet the proper solicitation requirements as outlined by the IRS:

  1. An initial request at the time the relationship with the individual is established (e.g., enrollment, hire, etc.);
  2. If the reporting entity does not receive the SSN after the initial request, it must make another request by 12/31 of the year in which the relationship with the individual begins. However, if the relationship begins in December, then the reporting entity can make the request before 1/31 of the following year; and
  3. If the reporting entity does not receive the SSN after the first two attempts, if must make a third request by 12/31 of the following year.

If the reporting entity is unable to obtain the SSN despite the above three attempts, then it is not required to continue to solicit the SSN, and the individual’s date of birth may be used in lieu of the SSN.

Likewise, health insurance carriers for employers with fully-insured plans will be reaching out to employees if they do not have a valid SSN for them or their dependents. Cigna will be sending out this communication to their fully-insured clients with 250 or fewer employees, explaining the outreach for SSNs. Also, this sample letter has been sent by Kaiser Permanente to members from whom they need SSNs. Anthem Blue Cross will similarly be soliciting SSNs if they do not currently have them on file. Anthem Blue Cross’ fact sheet explains how they will be handling the MEC reporting.

 

Action Items

Employers with self-insured group health plans should ensure that they make a “reasonable effort” to obtain SSNs for all covered individuals, in accordance with IRS rules. Employers with fully-insured group health plans should be on the lookout for a communication from their carrier regarding the outreach to their employees for SSNs.

 

More Information

For additional information on the requirement to make a “reasonable effort” to obtain SSNs of covered individuals, please see questions 16 and 17 of the IRS Q&A on Information Reporting by Health Coverage Providers (Section 6055).

 

The information and materials on this blog are provided for informational purposes only and are not intended to constitute legal or tax advice. Information provided in this blog may not reflect the most current legal developments and may vary by jurisdiction. The content on this blog is for general informational purposes only and does not apply to any particular facts or circumstances. The use of this blog does not in any way establish an attorney-client relationship, nor should any such relationship be implied, and the contents do not constitute legal or tax advice. If you require legal or tax advice, please consult with a licensed attorney or tax professional in your jurisdiction. The contributing authors expressly disclaim all liability to any persons or entities with respect to any action or inaction based on the contents of this blog.

Bonnie Mangels – Bonnie is the Corporate Counsel and Senior Compliance Manager for Sequoia. When not inundated in paperwork and legal briefs, her interests include arts and crafts, bunnies, and the Bay Area.