Ryan Kastner – Employee Benefits Consultant
Mid and large size employers have begun to breathe a sigh of relief knowing the first year of 1095/1094 Reporting is almost behind us. Unfortunately, 70% of employers are unable to fully relax as many are receiving notices of “filing discrepancies” within their 1095 and 1094 forms.
These errors can range from something as “simple” as mismatched names and Social Security Numbers (SSN) to incorrect or missing reporting codes. While the missing and incorrect codes may take an in-depth review and correction procedure, we are finding that many employers are not considering the potential implications of the mismatched names and SSN’s.
If an employer has received a notice with this particular discrepancy, there are a few important steps to take:
- Make sure to thoroughly review the employee file to determine what was provided upon hire and since. Did the employee submit a copy of their Social Security Card with their I-9? What is listed on the W4? Do you even have these in your files?
- Communicate directly with the employee to determine what caused the mismatch. Documentation is key therefore it is recommended you attempt to obtain information through both e-mail and written requests. Remember to always send these e-mails securely as they may respond with sensitive information.
Often these discrepancies are a result of something simple such as a typo, misspelling, or a result of a name change due to marriage. However, in some cases this may uncover an instance of identity fraud. Whatever the reason for the discrepancy, there are various implications which employers need to consider:
- If the discrepancy is due to a typo, misspelling, failure to notify HR of a name change, etc:
1a. Human Resources will need to take a look at their current policies and procedures during the hiring process and beyond. If it is determined the employee never submitted the proper paperwork, HR should attempt to remedy this situation timely. If it is determined that the employee failed to notify HR of a change, consider adding this as a question during an annual review, open enrollment, or periodically throughout the year.
1b. The employer also needs to consider any other implications due to this discrepancy. How long have W2’s been filed with incorrect information? Does this affect how you process payroll for these employees? How far back should an employer go to correct the discrepancy?
- If the discrepancy is determined to be due to be Identity Fraud:
2a. The employer needs to review their policies regarding fraud and follow the proper protocols to ensure they are compliant and protected. If those policies are not up to date and/or have not been reviewed in some time, consider updating them as soon as possible.
2b. The employer needs to consider other areas identity fraud affects such as the employer sponsored retirement plan. The contributions from the employee committing identity fraud should be refunded as they were remitted under a false SSN. The employer will have to work with their record-keeper, advisor, and ERISA counsel to determine what happens with earnings and an employer match.
There is much more to consider as employers begin to receive these notices and prepare for the reporting required in 2016.
Innovative Benefit Planning & Innovative Investment Fiduciaries have expert consultants who regularly advise employers on these situations among others. Innovative will host two upcoming educational seminars to inform and prepare employers with over 100 employees. All seminars are worth HRCI, SHRM, and CPE credits.
ACA Reporting Recap & Best Practices Seminar – Moorestown, NJ 6/29/16
ACA Reporting Recap & Best Practices Seminar- Philadelphia, PA 7/15/16
Please feel free to reach out to Innovative at 856-242-3330 if you would like to speak to a consultant about any notices, best practices, or next steps.
