So are all plans alike? No. Although many sound like they offer the same services, it’s important to know what’s behind the promises.
Unfortunately, credit monitoring is the most common form of protection offered to employees or customers when a breach occurs. But what about the other uses of someone’s identity that doesn’t show up on a credit report? It’s those other forms of identity theft that can destroy a family’s financial and emotional well-being.
Medical Identity theft can deplete the medical benefits of the victim as well as compromise their medical record. When a thief poses as the victim and uses their medical benefits, the victim could experience complications when they need to use those benefits. When a thief overrides the victims medical record with their own, it can lead to inaccurate diagnoses and inappropriate medical treatment that can have fatal consequences.
Social Security identity theft allows others to file fraudulent tax returns in the victim’s name. This can lead to years of trying to straighten out the mess with the IRS and other government agencies.
Criminal and character identity theft can compromise the victim’s freedom if the thief commits crimes, whether petty or serious, using the victim’s personal information.
Cybersecurity experts agree that the incidence of identity theft is growing and thieves are getting more sophisticated. This is evident by the number of times we hear about it. Should employees experience a breach either by someone hacking into their own company or into their offsite payroll company or medical benefits company, the employer becomes vulnerable to lawsuits.
So as an employer, what do you look for once you make the decision to offer identity theft as an employer-paid benefit? You can start by asking potential providers these questions.
- If we have a breach and one of my employees experiences medical identity theft, how will this coverage help them?
- If we have a breach and one of my employees is arrested because someone committed a crime using their information, how will this coverage help them?
- If we have a breach and one of my employees finds out that someone filed a tax return using their Social Security number, how will this coverage help them?
- If we do NOT have a breach and any of the above occurs to one of my employees, how will this coverage help them?
- Can I offer this coverage as a voluntary benefit and payroll deduct it instead of it being an employer-paid benefit? (This benefit is tax-free for the employee only if it is employer-paid.)
The answers to all of these questions will be very telling. Identity Theft coverage is a very affordable, valuable benefit to offer employees, but only if the execution behind the promises exists. If it doesn’t then it’s coverage in name only, not substance. Something else that is important for employers to realize: Providing identity theft coverage for employees can mitigate the liability the employer faces should their company experience a breach.
The following is the actual text of the announcement made by the US Treasury and IRS:
Text of IRS Announcement 2016-02: Federal Tax Treatment of Identity Protection Services "The Treasury Department and the IRS have determined that Announcement 2015-22 should be extended to include identity protection services provided to employees or other individuals before a data breach occurs. Accordingly, the IRS will not assert that an individual must include in gross income the value of identity protection services provided by the individual's employer or by another organization to which the individual provided personal information ... Additionally, the IRS will not assert that an employer providing identity protection services to its employees must include the value of the identity protection services in the employees' gross income and wages. The IRS also will not assert that these amounts must be reported on an information return (such as Form W-2 or Form 1099-MISC) filed with respect to such individuals. Any further guidance on the taxability of these benefits will be applied prospectively. This announcement does not apply to cash received in lieu of identity protection services."
Lori Lawson is a LegalShield Director and is an ID Shield specialist. Her company, New Line Associates is located here in Oceanside and she has been a Chamber member for over ten years. Visit their website at newlineassociates.com. Email her at email@example.com for a free, no obligation fifteen-minute consultation.