Data Match Letters Demand Attention

It’s June, prime time for weddings. Every bride considersthe superstition of “something old, something new,something borrowed, something blue.” It seems thatthe IRS and the Centers for Medicare and MedicaidServices (CMS) are taking the “something old” part ofthe phrase to heart. Employers are seeing a renewedflurry of data-match letters from the IRS, CMS and theSocial Security Administration (SSA).

This issue of Legislative Review is a reminder tobrokers and their employer clients regarding therequirements of the Data Match program.

What is Data Match?

This program coordinated by the IRS, CMS and SSAseeks to identify Medicare beneficiaries who receivedMedicare benefits with Medicare as the primary payerwhen Medicare should have been secondary. Theprogram has saved the Medicare funds more than3.5 billion dollars since its inception in 1989.

Employers are required to complete a questionnairethat will identify if the employer’s group health planshould have been the primary or secondary payer forMedicare services paid to a Medicare beneficiary.

Medicare Secondary Payer - Reviewed

The data match program reflects the rules thatsurround Medicare Secondary Payer. By way of review,Medicare is the secondary payer to some group healthplans for services provided to:

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The information contained in this publication is intended for the general information of our clients. It should not be construed as legaladvice or legal opinion regarding any specific or factual situation.

VOL. XXI, ISSUE 5 JUNE 2016

Letter from Karen Knippen

June is here! Something old, Data Match letters,

almost seems refreshing after so much time and

effort we’ve had to give to the ACA. Perhaps the ACA

is the something new.

It’s certainly clear that while we’ve been learning

about and implementing the “something new” in

ACA, we still must keep in mind “something old.”

MSP rules – and especially how an employer counts

to 20 to determine whether MSP applies – are still

relevant and can cause headaches for employers.

Sincerely yours,

Karen Knippen, RHU, REBC, CLTCSenior Vice President

EUCLID MANAGERS® has been serving the independent agent since1976 with a portfolio of group health, professional liability andindividual health, life, annuity and long-term care products. Weproudly represent UnitedHealthcare, Delta Dental of Illinois,MetLife and UnitedHealthOne Individual. We encourage yourfeedback and suggestions. Please call your EUCLID MANAGERS®

Marketing Representative or Marcy Graefen at (630) 238-2915 formore information. Outside Chicagoland, call (800) 345-7868.Website: www.euclidmanagers.com

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• The working aged• People with permanent kidney failure, and• Certain disabled people.

“Working aged” refers to persons who are employed atage 65 and over and people with employed spouses ofany age who have group health plan coverage becauseof their or their spouse’s employment status.

Medicare is the secondary payer to a group health planfor the working aged where a single employer of 20 ormore employees sponsors or contributes to a grouphealth plan or two (2) or more employers sponsors orcontributes to a group health plan and at least one ofthe sponsors or contributors has 20 or more employees.

It’s important to note that 20 employees does not referto full-time employees. The threshold is met “wheneveran employer has 20 or more employees for 20 ormore calendar weeks in the current calendar year orpreceding calendar year. The threshold is determinedby the number of employees on the payroll on anygiven workweek.

As importantly, when determining whether an employeris subject to the Medicare Secondary rules (MSP), theemployer must consider all entities that are part of acontrolled group following the IRS rules on controlled –or aggregated – groups. And, whether an employer has20 or more employees for MSP purposes is totallyunrelated to the number of employees who are eligiblefor or actually are enrolled in the group health plan.

The CMS booklet titled Medicare & Other HealthBenefits: Your Guide to Who Pays First includes ahandy chart that details when Medicare pays first andwhen a group health plan or other plan pays first. Asnippet of the chart appears on the next page. Thebooklet can be found athttps://www.medicare.gov/Pubs/pdf/02179.pdf.

Other situations addressed in the chart address personswith end-stage renal disease (ESRD), and COBRA

coverage, workers’ compensation and other accidents ordisabilities.

One of the pitfalls employers may face occurs when anemployer subject to the MSP rules encourages workersto enroll in Medicare versus the employer’s plan orwhen employers purchase a Medicare supplement foran employee in lieu of the employer’s plan. Theinstructions for the Data Match program include thisstern warning:

CMS wishes to make sure that employers understandthe legal consequences of purchasing directly orindirectly an individual Medicare supplemental(Medigap) policy for an employee or spouse of anemployee. This arrangement constitutes a GroupHealth Plan (GHP) under Medicare law and theInternal Revenue Code. Employers must understandthat even if they do not contribute to the premium,but merely collect it and forward it to the appropriateindividual’s insurance company, the arrangementmust be a primary payer to Medicare. In addition,the plan, because it takes into account the Medicareentitlement of the beneficiary, is also a non-conformingGHP which would subject the employer to possibleexcise taxes.

Employer Obligations for Data Match

Employers are required to complete a data matchreport within 30 days of receipt of the Data Matchnotice. In some cases an extension of time may berequested.

The notice contains an employer’s “Data Match PersonalIdentification Number (PIN).” Failure to respond to thisletter can result in penalties of as much as $1,000 perperson listed in the letter as well as IRS excise taxes.

The letter may ask for information on specific workersor their spouses during a specific period of time.Alternatively, it may direct employers the Data MatchSecure Website where employers will complete the

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questionnaire. It will also ask if the employee orspouse had employer-provided group health coverage.

Among the questions that employers must complete, ifapplicable, in response to the Data Match letter are:

• Did you offer a health plan to any employee at anytime since (date)?

• Did your organization make contributions on behalfof any employee who was covered under acollectively bargained Health and Welfare Fund(e.g. a union plan) since (date)?

• In the following years, did you have 20 or more

employees for 20 or more calendar weeks (thisincludes full time, part time, intermittent and/orseasonal employees)?

• In the following years, did you have 100 or moreemployees during 50% of your business days (fullor part-time)?

• Was this individual employed by your organizationduring (time period)?

• Was this individual covered under a Group HealthPlan at any time after (date)?

The employer is required to certify that the informationprovided is complete and correct.

Depending on the responses, anemployer may receive a follow-upletter with instructions to provideadditional information for listedindividuals regarding medicalexpenses paid on behalf of theseindividuals.

Completing this information may notbe as simple as the questions wouldseem to indicate. The data matchinquiry may be made years after themedical services were rendered. Inone case, a MSP inquiry – anddemand for payment to Medicare forpayment erroneously made as primary- was sent to the estate of a businessowner. The Data Match program cansubpoena business records to enforcecompliance.

A service publication for brokers from Euclid Managers®, proudlyrepresenting UnitedHealthcare of Illinois, Delta Dental of Illinois,

MetLife and UnitedHealthOne.

HealthiestYou and Lifelock available through Euclid Managers Concierge Services.

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Legislative Review is published by Euclid Managers®, 234 Spring Lake Drive., Itasca, IL 60143. For more information, contact your Marketing Representative or Marcy

Graefen at (630) 238-2915 or marcy@euclidmanagers.com. Outside Chicagoland: (800) 345-7868, Fax (877) 444-2250. © Permission to quote with credit to source.

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Inside:Data Match Letters Demand Attention