As another open enrollment season has come to a close, we have changed our focus to tax season. You might be hearing from Maryland Health Benefit Exchange (MHBE) and from your consumers about “checking the FTR flag.” What is an FTR and what does it mean? How can you prepare consumers?
Each year before open enrollment, MHBE runs a renewal batch to check current enrollees’ income, death status, Internal Revenue Service (IRS) flag, and Medicare eligibility. Based on the results, the consumer may not get renewed, may get renewed with financial assistance, or may get renewed without assistance. The IRS flag refers to the indicator in the IRS data that alerts the marketplace that a consumer who received an advanced premium tax credit (APTC) failed to fulfill their obligation to file a tax return and reconcile tax credits received in a prior year. For the 2020 plan year, this means looking at 2018 IRS data, since the filing season for tax year 2019 has not yet ended.
To “file and reconcile,” means the consumer needs to file a tax return (even if they would not otherwise have to do so) and use the 1095A Form they receive from the marketplace to complete IRS Form 8962. On the 8962, they record the amount of APTC received based on their estimated income. This figure is found on the 1095A. They then calculate APTC eligibility based on the actual modified adjusted gross income (MAGI) reported on their tax return. The difference is compared: if a consumer receives too much of a premium tax credit, they have to pay it back (pay it back may mean reduction in refund or addition to payment); if they didn’t receive enough of a premium tax credit in advance, they are entitled to receive the difference either as an increase in their tax refund or a decrease in tax liability.
Brokers, call center reps, navigators, certified application counselors, caseworkers and MHBE staff can all help consumers by reminding them of this obligation to file and reconcile each year.
If the FTR flag is in the IRS data when we run the renewal batch, the consumer is renewed without assistance. However, during open enrollment the consumer can attest that they did, in fact, file and reconcile, and the new eligibility determination will restore APTC.
After open enrollment, the attestation box is no longer available. If a consumer makes even a minor change on the application, with the flag still in the IRS data, the household will lose financial assistance the first of the following month.
In addition, the regulations also require us to recheck these attestations after open enrollment. This means we’ll check the IRS data again, and if a flag persists for a consumer who attested and had APTC restored, we’ll run the eligibility determination again. We do this first in a non-production environment so we can generate a list and send households a manual notice to remind them to file and reconcile if they have not already done so. The following month (March), we’ll check once again and deny financial assistance for any household where the flag persists, effective with April premium. Once assistance is lost, unless an exception is made, the consumer must pay full premium to remain enrolled.
MHBE will grant exceptions in certain cases, because we are aware there are times when the tax filer has met the obligation to file and reconcile, but the IRS still has the account flagged. If you have a consumer under that circumstance, first advise the consumer they must have proof of filing and reconciliation, by presenting either a tax transcript or an 387C letter, both available from the IRS. (Do not upload these documents into HBX.) Then you should escalate the case along your usual pathway, adding “For FTR Review” in the subject line. MHBE will reach out to the consumer to securely collect verifying documents and determine whether we can perform an override to restore financial assistance for the remainder of the year. Depending on the date the consumer actually filed and reconciled, the MHBE team also may be able to restore coverage lost due to non-payment of unassisted plan premium.