Pharmacy Rebate Written off and later received

[BetsyF-MOIC]

In 2Q 2020 pharmacy rebate receivables related to 2019 were written off. For 3Q 2020 funds were received related to the amount that was written off related to 2019.

What is the correct accounting and reporting treatment in Note 28?

1. Record the refund against the expense (where the original write off was booked). How would this be presented in Note 28 with this approach?

2. Re-establish the receivable for the amount received, record the cash received, and adjust Note 28 Columns for cash received for >180 days and Pharmacy Rebates as Billed columns.

[Glenn]

Hello,
The instructions for Note 28A are minimal

28. Health Care Receivables

Instruction:

A. In accordance with SSAP No. 84 Health Care and Government Insured Plan Receivables, the financial statement shall disclose the method used by the reporting entity to estimate pharmaceutical rebate receivables. For the most recent three years and for each quarter therein, the reporting entity shall disclose the following:

Estimated balance of pharmacy rebate receivable as reported on the financial statements;
Pharmacy rebates as billed or otherwise confirmed; and
Pharmacy rebates received.

The NAIC instructions leave a lot for interpretation.

Since you wrote it off, you technically should not write it back since you fully impaired the receivable so don't use option #2.
Use option #1 and offset the recovery in Q3 where you presented the write down in Q2. This way they offset in the table in total for 2020 but just different quarterly events

Regards,
Glenn Sackett