How To Fix Denial Code 105 | Common Reasons, Next Steps & How To Avoid It
Denial Code 105 means that a claim has been denied due to tax withholding. Below you can find the description, common reasons for denial code 105, next steps, how to avoid it, and examples.
2. Description
Denial Code 105 is a Claim Adjustment Reason Code (CARC) that indicates a claim has been denied due to tax withholding. This means that the insurance company will not make the payment for the billed service because taxes are being withheld from the reimbursement amount. In simpler terms, the claim is not payable until the appropriate taxes have been deducted.
2. Common Reasons
The most common reasons for denial code 105 are:
- Incomplete or Incorrect Tax Information: If the provider’s tax information is missing or incorrect on the claim, the insurance company may deny the claim under code 105. It is essential to ensure that all tax-related details, such as the provider’s Tax Identification Number (TIN), are accurately provided.
- Failure to Withhold Taxes: If the provider fails to withhold the appropriate taxes from the reimbursement amount, the insurance company may deny the claim under code 105. It is crucial for providers to understand and comply with tax withholding requirements to avoid denials.
- Non-Compliance with Tax Regulations: If the provider is not in compliance with tax regulations, such as failing to file tax returns or pay taxes owed, the insurance company may deny the claim under code 105. Providers should ensure they are meeting all tax obligations to prevent denials.
- Incorrect Reporting of Taxable Income: If the provider incorrectly reports taxable income related to the billed service, the insurance company may deny the claim under code 105. It is important to accurately report all taxable income to avoid denials.
- Failure to Provide Supporting Documentation: If the provider fails to provide the necessary supporting documentation related to tax withholding, the insurance company may deny the claim under code 105. Providers should ensure they have proper documentation to substantiate any tax withholding claims.
3. Next Steps
You can fix denial code 105 as follows:
- Review Tax Information: First, review the tax information provided on the claim. Ensure that all tax-related details, such as the provider’s TIN, are accurate and complete.
- Comply with Tax Withholding Requirements: If the denial is due to failure to withhold taxes, ensure that you understand and comply with the tax withholding requirements. Consult with a tax professional if needed to ensure compliance.
- Address Tax Compliance Issues: If the denial is due to non-compliance with tax regulations, take the necessary steps to address the compliance issues. This may involve filing tax returns, paying taxes owed, or seeking guidance from a tax professional.
- Correctly Report Taxable Income: If the denial is due to incorrect reporting of taxable income, review the reported income and make any necessary corrections. Ensure that all taxable income related to the billed service is accurately reported.
- Provide Supporting Documentation: If the denial is due to a lack of supporting documentation, gather the necessary documentation to substantiate the tax withholding claims. This may include tax forms, receipts, or other relevant records.
- Resubmit the Claim: Once you have addressed the specific issue that led to the denial, resubmit the claim with the necessary corrections and supporting documentation. Ensure that all tax-related information is accurately provided.
4. How To Avoid It
You can prevent denial code 105 in the future by following these steps:
- Ensure Accurate Tax Information: Double-check that all tax-related information, such as the provider’s TIN, is accurate and up to date. Regularly review and update this information as needed.
- Understand Tax Withholding Requirements: Familiarize yourself with the tax withholding requirements applicable to your practice or organization. Stay informed about any changes or updates to these requirements.
- Comply with Tax Regulations: Ensure that you are in compliance with all tax regulations, including filing tax returns and paying taxes owed. Seek guidance from a tax professional if needed.
- Accurately Report Taxable Income: Take care to accurately report all taxable income related to the billed services. Keep detailed records and consult with a tax professional if you have any questions or concerns.
- Maintain Proper Documentation: Keep thorough and organized documentation to support any tax withholding claims. This includes tax forms, receipts, and other relevant records.
5. Example Cases
Below are two examples of denial code 105:
- Example 1: A healthcare provider submits a claim for a reimbursable service but fails to include their correct Tax Identification Number (TIN). The insurance company denies the claim under code 105 due to incomplete tax information.
- Example 2: A provider receives reimbursement for a service but fails to withhold the appropriate taxes from the reimbursement amount. The insurance company denies a subsequent claim related to the same service under code 105, indicating the need for tax withholding.
Source: Claim Adjustment Reason Codes