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If you utilized the IRS Advance Monthly Payment Process for the payment to BCBSM of your monthly health insurance premium, you need to read this update.
IRS Form 8885 has an omission that you need to understand.
Look at Form 8885. On the top half of the form, in Part I, the 2nd bullet is not correct. The statement should have included these words at the very end of the sentence- or the US Treasury- HCTC. Here is the entire corrected statement-
Therefore, Part I reads totally different with the inclusion of the US Treasury. This means retirees utilizing the AMP should check the box for each month they received the HCTC via the AMP.
The letter you received with your 1099-H from the IRS is correct. Please read it carefully. All AMP enrollees are required to complete the 8885 form and submit with your tax return. If you have already submitted your tax return and did not check the appropriate months boxes, you should file an amended return before the April 15 tax deadline.
In Part II line 2 of Form 8885, the statement is correct as printed. Do not confuse the change made for line 1 above with what this line is asking. For example, if all 12 months of your premium were paid through the AMP, lines 2-5 should all be ZERO.
You do not need to include the 1099-H form with your tax return.
Lastly, we are aware that Intuit’s Turbo Tax has a flaw and will not allow a zero entry for line 2. If you try to force the entry, we believe your form will not be included in the e-file return to the IRS. The IRS and Intuit are working to resolve the problem.
If you are a Turbo Tax user and you want to be notified by Turbo Tax when the bug is fixed, click on the link below and register with Intuit.
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PBGC Pension Recipient Age Up From 64 to 65 – Spouse Under Age 65
2 Person Contract
PBGC pension recipient turns 65 in May (their BCBSM medical ends April 30th).
Mail letter to the IRS on April 10th stating that PBGC pension recipient will be eligible for Medicare May 1st. Include PIN and SS# in this letter. This will key them to cancel the PBGC pension recipient in their system. In the same envelope include Form 13441-A for their Qualified Family Member (QFM). A sample form here is at the DSRA-BT website. Be very careful that you have the correct premium, both total and 27.5%, for the correct individual HCTC plan.
BCBSM will establish a new contract for spouse only of same metal tier but in a non-HCTC division 60 days before the retiree turns 65. The spouse may see an invoice from BCBSM for the full amount of the premium in the month prior to the PBGC pension recipient turning 65. DO NOT pay this unless there is a delay in getting a new PIN number from the IRS and you are not able to make the May 10th payment cut-off.
Once the spouse receives their enrolled letter from the IRS, fill out a new BCBSM enrollment form DSRABT17 and check the HCTC box at the top. Include your new PIN number on the enrollment form and a copy of your letter from the IRS. To speed this process it is recommended that you email or fax this information.
If payment cannot be made by the 10th of the month, full payment must be made to BCBSM.
BCBSM in this instance must indicate in their records that the retiree made the payment. In this situation, the IRS has introduced a new procedure that allows the HCTC AMP enrollee to request an immediate refund of the 72.5% HCTC credit. The retiree files form 14095 with the IRS for HCTC refund for the month of May. (Up to 12 week turnaround time.) Form available at the IRS website or the DSRA-BT website.
BCBSM has told us that they will not send out a letter this year stating your plan is considered qualified for the HCTC. They have however sent out forms 1099-H and 1095-B. The IRS has informed us not to instruct HCTC enrollees to include a copy of the 1095-B as “proof” of coverage when you file your tax return. The reason being it is an affordable care act document and inclusion might imply you are not eligible for the HCTC.
If you are in the AMP in 2017, BCBSM has turned off your access to your previous payment history at their website. For those of you who were in the HCTC AMP for part of 2016 we recommend that you include a copy of the following documents with your tax return:
Remember, you can only claim the months you paid the full premium. Do not include months that you were in the AMP.
For those not in the AMP, you have access to your payment history at the BCBSM website and can use that as proof of payment rather than bank records if you prefer.
If you do not have bank records or access to your previous payment history on the BCBSM website, we suggest that you call BCBSM customer service at 1-877-354-2583 and request a copy of your proof of payment be mailed (or emailed) to you for the months you need.
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The IRS will now accept your check or money order due no later than February 10, 2017 for your insurance premium payment for the month of February. Please remember, premium payments received before the 22nd of the month prior to the premium payment will be returned to the sender.
If your 27.5% premium payment is not received by the IRS between the 24th of the current month and the 10th of the month your premium is due, you will have to pay 100% of that months premium directly to Blue Cross Blue Shield of Michigan and you will have to request an IRS refund of the 72.5% on your federal tax return the following year. We strongly encourage you to send your payment along with the completed voucher during the specified window in order to avoid paying 100% of the month’s premium.
The IRS will not accept your check or money order before the 22nd of the current month for next month’s HCTC premium payment. Premium payments received before the 22nd of the current month will be treated as current month payments and will be returned to the sender. (A payment for February, received before January 22, will be treated as a duplicate payment for January) If your 27.5% premium payment is not received by the IRS between the 22nd of the current month and the 10th of the month your premium is due, you will have to pay 100% of that months premium directly to Blue Cross Blue Shield of Michigan and you will have to request an IRS refund of the 72.5% on your federal tax return the following year. We strongly encourage you to send your payment along with the completed voucher during the specified window in order to avoid paying 100% of the month’s premium.
As we have noted in our prior communications to you, there is a NEW Advance Monthly Payment (AMP) process that has been put in place by the IRS/HCTC effective January 01, 2017. The process will require you to send in a voucher, your IRS assigned Participant Identification Number (PIN) and your payment each month to the IRS. The IRS will verify eligibility each month and then will collect the 27.5% premium payment from the plan participant (you), matching it with the 72.5% premium subsidy from the IRS/HCTC program, and make payment to BCBS of Michigan for the insurance program selected by you. This means that BCBSM, the pre-65 plan administrator, will no longer be managing the payment and billing process for you.
By now, most of you have received your “Welcome” letter from the IRS HCTC/AMP Program. That letter will include your Participant Identification Number (PIN) on the top of the letter. You must mail one of the HCTC AMP Payment vouchers including your PIN, each month to the IRS/HCTC address located on the voucher, along with your Check, Money Order or Certified Check (the only forms of payment acceptable by the IRS/HCTC) to make your payments for each month you remain eligible to participate the HCTC AMP monthly program in 2017.