What You Need to Know About Medicare and 1095/1094 Reporting in October 2017

Vol. 16 No. 2

irs medicare 2

Many of the schools ISM works with have questions about employee benefits and how to ensure the long-term well-being of their school’s administrators, faculty, and staff. Lucky for us, ISM’s Affordable Care Act Specialist and Flexible Benefits Manager provides a wealth of knowledge in these areas.

Today, we’re sharing some recent information regarding Medicare Part D Notices and 1095/1094 Reporting.

Medicare Part D Notices

If your school offers prescription drug benefits with your health insurance, you must give a creditable/noncreditable coverage notice to all employees and their dependents who are covered by your health insurance and are Medicare-eligible by October 15. Model notices are available online here.

The notice lets employees and their dependents know that, if they have creditable coverage, when they apply for Part D (prescription drug benefit) they will not pay a lifetime penalty. If your coverage is noncreditable, they must get Part D coverage or face the penalty in the future.

Many ask: What is creditable coverage? The prescription drug portion of your health insurance cannot actuarially have a deductible of more than $400 in 2017 ($405 in 2018). If you have a fully funded health insurance plan, your insurance carrier can tell you if your coverage is creditable.

You should have already reported whether your drug benefits are creditable or noncreditable to the Centers for Medicare and Medicaid Services within 60 days of the start of your plan year. The notice we’re discussing today, due on October 15, is to inform your Medicare-eligible employees or dependents whether they are creditable or noncreditable and what that means for them.

1095/1094 Reporting

Annual reporting on the employer/individual mandate to the IRS and your employees is just around the corner.

If your school has 50 or more full-time equivalent employees or if you self-fund your health insurance, this is important. Make sure you have the ability to compile the data needed to complete the reporting forms. It will ask for calendar-year information based on the number of months you covered your employees.

The IRS released 1095-C/1094-C forms and instructions. It also released 1095-B/1094-B forms and instructions that small, self-funded plans and insurance companies use. Click below for the draft form that makes sense for you.

1095-C/1094-C

1095-B/1094-B

Recent Changes

The first change is that there is no automatic extension for completing the forms this year. This means that the deadline to send these forms to relevant employees is January 31, 2018. You must send them to the IRS via physical mail by February 28, 2018, or electronically by March 31, 2018.

The other main change is that you can no longer rely on good faith compliance to be sufficient when completing the forms. That means that if you make a mistake, you must send a corrected form or face a fine.

There is an exception to sending corrected forms. When completing form 1095-C, line 15 (employee’s cost for lowest priced health insurance) can be off by less than $100 without submitting a corrected form or incurring a penalty.

Also, the transition relief codes on 1094-C have been eliminated as they no longer apply. The IRS continues to emphasize that if the employee is using the code 2F (W-2 safe harbor) on line 16 of the 1095-C, he or she must use it for the entire calendar year or the calendar period that he or she was covered by the health insurance plan.

We hope you found this information helpful! If you have any questions, please don’t hesitate to reach out to our Affordable Care Act Specialist. We respect your privacy. You can also view ISM’s health care solutions here.

Additional ISM Resources:
The Source for Business and Operations Vol. 12 No. 4 Whose Responsibility Is Health Care?

Additional ISM resources for Gold Consortium members:
I&P
Vol. 37 No. 12 Key Advice on Shaping Your Employee Health Benefits Plans

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