|WHO||Group health plan sponsors who offer prescription drug coverage (Large and small; insured and self-insured; grandfathered and not)|
|WHAT||Must provide a Medicare Part D “Creditable Coverage” notice to plan participants who are Medicare-eligible (Links to CMS Model Notices are below)|
|WHEN||Before October 15th of each year|
|WHERE||CMS Model notices are found here.|
|WHY||To notify Medicare-eligible participants in employer group health plans as to whether or not the employer group coverage is “creditable” so such participants do not unwittingly incur a late enrollment penalty.|
Group health plan sponsors must provide Medicare Part D “creditable coverage” notices prior to October 15th, the start date of the Medicare annual enrollment period for Part D, Prescription Drug coverage. (The enrollment period is October 15-December 7.) Most plan sponsors use the Model Medicare Part D Notices provided by the Centers for Medicare and Medicaid Services (CMS) to notify affected plan participants. Links to all the model letters (in English and Spanish) are available here. These notices are in .pdf format. Leavitt clients who want a Word version of the notice can contact their Leavitt advisor.
The October 15th deadline applies for all group health plan sponsors, regardless of plan year, plan size, employer size, employer type (private sector, governmental or church), grandfather status, or whether the plan is insured or self-funded.
Although the requirement is only that “Medicare-eligible” individuals be provided this notice, employers often provide it to all plan participants and dependents, because of the practical difficulty of knowing who is Medicare-eligible.
Employers who send out Open Enrollment packets prior to October 15th often include the Medicare Part D notices in the Open Enrollment packets, to avoid the extra cost and administrative burden of sending them separately.
Employers are also required to notify CMS online annually that they have sent out these Part D notices. The notice to CMS is due within 60 days after the start of the plan year. See the last paragraph of this article for details.
The Medicare Modernization Act requires group health plan sponsors that offer prescription drug coverage to notify Medicare-eligible plan participants (employees and dependents) as to whether their prescription drug coverage is “creditable coverage” – which means the coverage is expected to pay on average at least as much as the standard Medicare Part D prescription drug coverage. The most current Model notices on the CMS website say “For use on or after April 1, 2011” in the heading, because in 2011 the Medicare Part D annual enrollment period changed from November 15th to October 15th.
When Is the Medicare Part D Notice Required?
Medicare Part D notices must be provided at least once annually, prior to October 15th, which is the beginning of the Part D annual enrollment period. Additional notices must be provided if the employer-provided coverage changes (from creditable to non-creditable, or vice-versa), if the individual requests a copy of the notice, and when an individual first enrolls in the employer plan.
Employers who provided these notices earlier this year are not required to provide them again, since these notices have not changed recently. The notices are dated for use on or after April 2011. The CMS website page was last updated 4/5/2013. There are separate Model Notices for Creditable Coverage Non-Creditable Coverage.
Why is the Part D Notice Required?
The reason plan sponsors are required to provide Part D Notices is because a penalty will be imposed on an individual if he/she, after becoming eligible for Medicare Part D coverage, has a lapse of “creditable” prescription drug coverage for a period of at least 63 days. Additionally, such individuals may have to wait until the following October to join. An individual can elect either Medicare prescription drug coverage or other “creditable coverage” to avoid having a lapse in coverage. Thus, Medicare-eligible participants in employer group health plans must know whether or not the employer group coverage is “creditable” so they do not unwittingly incur a late enrollment penalty.
Additional Details on the Disclosure Requirements
- Group health plan sponsors to whom this disclosure requirement applies include employers and Unions; multiple employer welfare arrangements (MEWAs); federal, state and local government employers; and churches.
- The Part D Notice must be provided not only to Medicare-eligible active working employees and their dependents, but also to Medicare-eligible participants who are retired, on COBRA, or disabled and covered under the employer’s prescription drug plan.
- Although the requirement is only that “Medicare-eligible” individuals be provided this notice, employers often provide it to all plan participants and dependents, because of the practical difficulty of knowing who is Medicare-eligible.
Annual Notice to CMS Also Required, though not by October 15th
Additionally, plan sponsors are required to notify CMS annually, via the CMS website (Online Disclosure to CMS form). This notice must be made within 60 days after the beginning of the plan year (or contract renewal date, for small plans that do not file Form 5500s so do not specify a plan year), and it pertains to the creditable coverage status for the current plan year. For calendar year plans, this notice must be provided to CMS no later than March 1. Sponsors of non-calendar year plans should mark their calendars to make sure the disclosure to CMS is made within 60 days after the beginning of the plan year. (E.g., for an April 1 plan year, the CMS online disclosure should be made no later than May 30.)
Additionally, if applicable, plan sponsors must complete the Online Disclosure to CMS Form within 30 days after termination of a prescription drug plan or within 30 days after any change in creditable coverage status.
For additional information, click here for the main CMS webpage that provides guidance on “creditable coverage.” (If you are reading a paper copy of this Leavitt Bulletin, the CMS webpage is https://www.cms.gov/Medicare/Prescription-Drug-Coverage/CreditableCoverage/)