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.
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.
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.
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.
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.
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
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.
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.
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.
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.)
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