UBP blog


Can employers demand access to tax and bank records to determine benefits eligibility?

This question was raised recently in The Boston Globe by an employee of a large private company. Employees there were told not too long ago that they’d have to submit tax returns and bank statements to verify their dependents’ benefits eligibility.

The employee who raised the question expressed concerns that it wasn’t legal and/or appropriate for employers to demand access to these private documents. He or she also cited the fact that employees can choose not to comply with this employer request, but was concerned about the possibility of losing health coverage as a result.

Reason for concern:

As web technology becomes more advanced both proving and protecting identities will get more challenging. This will be an issue for both employees and employers.

Verifying benefits eligibility involves several different parties (employers, employees, insurers and various government entities at times) all with different needs for information. Employers will need to find a way to prove their employees’ (and their employees’ dependents) benefits eligibility while protecting their identities at the same time.

The issue discussed in The Globe calls into question a couple of things:

1. Can (and should) an employer demand access to tax and bank documents to verify benefits eligibility?

According to an employment lawyer cited by The Boston Globe, employers may demand access to these documents, but can only get access with an employees’ consent, the attorney also suggested that before giving their employers consent to access private information, employees should first consider the purpose behind the information request. What is the employer trying to verify?

Are there other documents employees can present that will verify this?

For the particular case in question, employees can offer to present documents such as birth certificates and marriage licenses to verify benefits eligibility of their spouses and dependents.

They could also present the required documents but request that their employers not make and retain a copy of it. Or, they could give employers copies of the documents with personal information (i.e. bank account numbers) blacked out.

2. Can employers deny health insurance coverage to employees who don’t comply with this demand?

The answer to this question is technically “yes.” Employers are not required by federal law to offer health insurance to their employees. However, in Massachusetts, if they don’t offer employees coverage (or similarly if they take away an offer of coverage), they’ll need to pay a penalty.

Another tactic for discouraging employees to take health insurance that covers spouses and dependents is to subsidize as little as legally required of the premium. Employers who approach “family” health insurance in this way want their employees’ family members to get health insurance elsewhere, perhaps through a spouse or state programs. That is a different agenda than employers who simply want to verify spouses’ and dependents’ eligibility so they are not unnecessarily paying to insure people who don’t qualify for their plan.

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