If you have issues concerning reference doc, you can search the pandoc-discuss mailing list on Google Groups.
From my link above:
An extension can be enabled by adding +EXTENSION to the format name and disabled by adding -EXTENSION.
I.e., you basically write
pandoc --from markdown+citations --to docx ...
The most Markdown extensions, however, are enabled by default, so in the example above you can skip the +citations part. Pandoc will also try to determine the source and output format from the corresponding file extensions, so you actually can skip the --from and --to options as well.
Yes, I do it in terminal or via shell scripts or makefiles.
In your case the terminal command would be something like:
pandoc --citeproc --bibliography ~/.pandoc/Library.json -o test.docx test.md
The option --bibliography will probably enable the option --citeproc automatically, when converting to certain formats like DOCX.
If it works in terminal, but you still have issue with the pandoc plugin, I would perhaps suggest to contact the author(s) of the plugin.