Tax Return for Insurance Dependent Eligibility?


D

Dan Delgado

I apologize if this is too far off-topic.

My employer (about 5000 employees) hired ADP to verify eligibility of
dependents for insurance. It looks like it's mostly spouses that
they're concerned with. To do this, they are demanding that we send
in a copy of our current (in some cases past years, for several years)
tax returns.

Is this even a legitimate use of tax returns? I thought this
information was confidential for some reason. The idea of someone
sifting through my personal information and finances to establish that
my wife is really my wife seems (at best) like overkill to me.

Thanks for your thoughts on this.
 
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S

Stuart A. Bronstein

Dan Delgado said:
My employer (about 5000 employees) hired ADP to verify
eligibility of dependents for insurance. It looks like it's
mostly spouses that they're concerned with. To do this, they
are demanding that we send in a copy of our current (in some
cases past years, for several years) tax returns.

Is this even a legitimate use of tax returns? I thought this
information was confidential for some reason. The idea of
someone sifting through my personal information and finances to
establish that my wife is really my wife seems (at best) like
overkill to me.
Send them a copy of your marriage license.

Tax returns are priviledged or confidential to an extent. But I
don't know if that would apply in this situation. However I am
unaware of any legitimate reason they would need to see your tax
return.
 
P

paulthomascpa

I apologize if this is too far off-topic.

My employer (about 5000 employees) hired ADP to verify eligibility of
dependents for insurance. It looks like it's mostly spouses that
they're concerned with. To do this, they are demanding that we send
in a copy of our current (in some cases past years, for several years)
tax returns.

Is this even a legitimate use of tax returns? I thought this
information was confidential for some reason. The idea of someone
sifting through my personal information and finances to establish that
my wife is really my wife seems (at best) like overkill to me.

Thanks for your thoughts on this.



Blot out all income numbers, except they should already have both SSN's if
both are covered.

Even if filing separately, the spouse name and SSN are shown. Leave the
kids names, etc as well - same reasoning.

The numbers on the return aren't applicable to the insurance policy.
 
S

Steve Pope

Send them a copy of your marriage license.
Tax returns are priviledged or confidential to an extent. But I
don't know if that would apply in this situation. However I am
unaware of any legitimate reason they would need to see your tax
return.
Perhaps this is a backdoor way of trying to learn
if the spouse has an employer, and therefore possibly has
insurance.

Steve
 
H

HLunsford

Dan said:
I apologize if this is too far off-topic.

My employer (about 5000 employees) hired ADP to verify eligibility of
dependents for insurance. It looks like it's mostly spouses that
they're concerned with. To do this, they are demanding that we send
in a copy of our current (in some cases past years, for several years)
tax returns.

Is this even a legitimate use of tax returns? I thought this
information was confidential for some reason. The idea of someone
sifting through my personal information and finances to establish that
my wife is really my wife seems (at best) like overkill to me.

Thanks for your thoughts on this.
Once upon a time when I needed to prove my social security number (I
lost my actual card some time back in 1949 and never bothered to get
another; still haven't) I made a copy of page one of the 1040, then used
a black out pen to blank out wife's name and number, folded it so that
only my name, address and number appeared and re photocopied it.
Presto! no income figures revealed.

ChEAr$,
Harlan Lunsford, EA n LA
 
M

Mark Bole

Not really, but if they ask for it and you provide it, then you've given
up any privacy in that regard.


They want that, too. Funny thing, even divorced people can produce a
marriage certificate, having one doesn't prove it's currently in effect.

Perhaps this is a backdoor way of trying to learn
if the spouse has an employer, and therefore possibly has
insurance.
No, because nowhere on the front of the return would it indicate which
spouse had which sources of income, and the income numbers will be
blacked out anyway.

I too have seen this request, other employee benefit TPA's (3rd party
administrators) are asking for the same things. It's patently ridiculous.

First of all, it's quite possible one hasn't filed 2008 yet, so they do
allow for a prior year return -- yet neither 2007 nor 2008 have
*anything* to do with whether a spouse or dependent is an eligible
insured in 2009 and going forward. And perhaps the insured is
delinquent with filing for several years -- is being current on taxes
now suddenly a requirement for employer-sponsored insurance? (well,
that actually makes some sense, given all the tax breaks involved).

Second, there is no way to my knowledge to verify that what is turned in
was actually filed, and not just a made-up-and-filled-in PDF file,
especially since they don't want income, SSN's, or signatures -- just
the 1040 page 1 header.

-Mark Bole
 
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W

Wallace

paulthomascpa said:
Blot out all income numbers, except they should already have both SSN's if
both are covered.

Even if filing separately, the spouse name and SSN are shown. Leave the
kids names, etc as well - same reasoning.

The numbers on the return aren't applicable to the insurance policy.

I always write or type "REDACTED" over the "blotted out" info. That's what
lawyers do, so maybe they will leave you alone after that.
 
J

John Levine

My employer (about 5000 employees) hired ADP to verify eligibility of
Blot out all income numbers, except they should already have both SSN's if
both are covered.
Why would they have or need the spouse's SSN? This isn't Medicare,
the account numbers are arbitrary. My insurance carrier doesn't have
either of our SSNs, just a nine digit account number starting with
000.

R's,
John
 
G

Gene E. Utterback, EA, RFC, ABA

Stuart A. Bronstein said:
Send them a copy of your marriage license.

Tax returns are priviledged or confidential to an extent. But I
don't know if that would apply in this situation. However I am
unaware of any legitimate reason they would need to see your tax
return.
I'm starting to get questions like this from clients too. I actually called
one employer and asked about it and they said "the marriage only shows that
your married NOT that the spouse, or anyone else, is your DEPENDENT. The
insurance we offer is for DEPENDENTS."

I didn't like this but there was nothing I could do about it. I fear the
employer has the right to ask and the employee has the right to refuse, but
refusal may result in no insurance.

I even offered to write a letter for my client stating that the returns were
filed as married joint and that the three children in question were actually
claimed as dependents - NO DICE!

Gene E. Utterback, EA, RFC, ABA
 
S

Stuart A. Bronstein

I'm starting to get questions like this from clients too. I
actually called one employer and asked about it and they said
"the marriage only shows that your married NOT that the spouse,
or anyone else, is your DEPENDENT. The insurance we offer is
for DEPENDENTS."

I didn't like this but there was nothing I could do about it. I
fear the employer has the right to ask and the employee has the
right to refuse, but refusal may result in no insurance.

I even offered to write a letter for my client stating that the
returns were filed as married joint and that the three children
in question were actually claimed as dependents - NO DICE!
Interesting. I haven't seen any cases dealing with who is a
dependent. Normally it's just assumed that a spouse and minor
children are in that category.

Based on the laws in most states one spouse has the legal
obligation to provide for the other to the extent he is able and it
is necessary. In my opinion that makes a spouse a "dependent"
irrespective of who is earning what money, and whether the spouse
actually relies on the other spouse's income.
 
P

Paulo Joe Jingy

Send them a copy of your marriage license.
The requests from ADP seem to be arbitrary (other than they want
everyone's tax return). In many cases they asked for both a marriage
license and a tax return. In at least one situation that I know of,
they requested that an employee send a copy of his tax return and a
copy of his ex-wife's tax return. He is remarried and has full
custody of the children. The ex-wife says that she didn't file and
that even if she did, she wouldn't give him a copy of her tax return.
It gets pretty asinine.
Tax returns are priviledged or confidential to an extent.  But I
don't know if that would apply in this situation.  However I am
unaware of any legitimate reason they would need to see your tax
return.
My direct manager was upset about the whole thing. He went up to the
top of the company and they changed the requirements. They still say
we need to send in a tax return, but now only the front page (the
whole thing before), and we are "allowed" to black-out the dollar
amounts (we weren't before).

I thought the same that a poster, further down in this thread did. If
you are already lying about a dependent, what stops you from forging a
tax return? (Certainly not your "honest" nature.)

The upshot of the whole thing is, since their is a time limit to
respond, and since many people don't keep a record of their tax return
(especially if they file electronically), people's spouses, who really
are eligible (and in some cases their children), will become
ineligible because the employee didn't fulfill an arbitrary,
additional requirement. And many people, who do keep records, will
just forget to do it within the time limit. Maybe that's the whole
intent, an excuse to drop people and reduce costs.

It's a good way to lose good employees even in a depressed economy.

Thanks for all the responses.
 
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D

D. Stussy

Gene E. Utterback said:
I'm starting to get questions like this from clients too. I actually called
one employer and asked about it and they said "the marriage only shows that
your married NOT that the spouse, or anyone else, is your DEPENDENT. The
insurance we offer is for DEPENDENTS."

I didn't like this but there was nothing I could do about it. I fear the
employer has the right to ask and the employee has the right to refuse, but
refusal may result in no insurance.

I even offered to write a letter for my client stating that the returns were
filed as married joint and that the three children in question were actually
claimed as dependents - NO DICE!
I don't believe you can write such a letter (at least without a WRITTEN
release from your client) as you're disclosing tax return information.
 
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S

Seth

Paulo Joe Jingy said:
The upshot of the whole thing is, since their is a time limit to
respond, and since many people don't keep a record of their tax return
(especially if they file electronically), people's spouses, who really
are eligible (and in some cases their children), will become
ineligible because the employee didn't fulfill an arbitrary,
additional requirement. And many people, who do keep records, will
just forget to do it within the time limit. Maybe that's the whole
intent, an excuse to drop people and reduce costs.

It's a good way to lose good employees even in a depressed economy.
It might even be a good way to lose a very expensive lawsuit or two.

If the Plan says that certain people are covered, and the company
fails to cover them due to silly paperwork failures or the like, the
company is in violation of the Plan. That could cause them to lose
two lawsuits: first, to the employee whose dependents weren't covered,
and second, to the IRS when the plan is disqualified. (Consider that
the highly compensated employees are more likely to get the paperwork
rights, and the law prohibits qualified plans from discriminating in
favor of highly compensated employees.)

Seth
 

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