ACA Information Reporting Penalties Increased for Returns Filed in 2025

IRS Revenue Procedure 2023-34 includes updated penalty amounts that may apply to reporting entities that fail to comply with the Affordable Care Act’s (ACA) requirements under Internal Revenue Code Sections 6055 and 6056. The increased amounts apply to 2024 information returns and individual statements that are required to be filed and furnished in 2025.

Prescription Drug Data Report: June 2024

The beginning of the third season of Prescription Drug Data Collection (RxDC) reporting is currently underway, marking a crucial phase for compliance. The deadline, scheduled annually for June 1st, necessitates reporting on the preceding calendar year’s data. As mandated by the Consolidated Appropriations Act, every group medical plan is obligated to submit a comprehensive report to the Centers for Medicare & Medicaid (CMS). This report entails detailing the costs and pertinent medical information related to the prescription drug and other benefits offered by the group health plans, except for excepted benefits. Notably, RxDC reporting is mandatory for all groups, irrespective of their insurance status, scale, or whether they are operating under a grandfathered plan.

Electronic submission through the CMS Enterprise Portal is the designated method for completing the filing process. Although employers bear the ultimate responsibility for RxDC filing, most engage third-party administrators (TPAs) and pharmacy benefit managers (PBMs) contracted to provide services for the group health plan. These entities typically assist in or directly handle the submission of filings on behalf of the group health plan, ensuring compliance with regulatory requirements.

2024 RxDC Reporting Updates:

Streamlined Calculation Method: The process for calculating the average monthly premium has undergone simplification. Previously computed on a per member per month basis, it is now expressed as the total annual premium divided by 12.

Enhanced Data Aggregation Standards: CMS has implemented stricter guidelines regarding data aggregation. Specifically, data in files D1 and D3 through D8 must align in detail with the information provided in the D2 file. This entails ensuring that if the data in the D2 file pertains to a specific employer’s plan, the data in files D3 through D8 must exhibit an equivalent level of specificity.

Considerations for Employers:

For employers with fully insured plans, insurance carriers will manage the RxDC reporting process. Nevertheless, it is advisable for employers to verify with carriers that the reporting has been duly completed and to provide any additional required information.

Employers operating under self-insured plans bear the ultimate responsibility for RxDC filing. In instances where they engage third-party administrators (TPAs) or pharmacy benefit managers (PBMs) to aid in filing, it is imperative to ensure timely completion of the process.

Medicare Part D Changes

The Inflation Reduction Act of 2022 (IRA) introduces various provisions aimed at reducing costs within Medicare Part D plans, potentially impacting the creditable coverage status of employer-sponsored prescription drug coverage starting in 2025.

Employers offering prescription drug coverage to individuals eligible for Medicare Part D are required to notify both these individuals and the Centers for Medicare and Medicaid Services (CMS) regarding the creditable status of their prescription drug coverage. This indicates whether the employer’s prescription drug coverage is deemed equivalent to or better than Medicare Part D coverage.

Previously, CMS had indicated in its Draft Part D Redesign Program Instructions that the “simplified determination” method, one of the approaches for assessing creditable coverage, would cease to be valid as of the calendar year 2025 due to significant changes made to Medicare Part D by the IRA. However, the Final Part D Redesign Program Instructions reveal that CMS will permit the continued use of the simplified determination methodology, without alteration, for the calendar year 2025, specifically for group health plan sponsors not seeking the retiree drug subsidy.

In forthcoming guidance, CMS will reassess the ongoing use of the existing simplified determination methodology or establish a revised methodology for the calendar year 2026.

Question of the Month

Q. Where can I find the updated RxDC reporting instructions?

A. The most recent version of the reporting instructions and templates is available on the Centers for Medicare and Medicaid website.