It’s that time of year again: Before October 15th employers who sponsor group health plans must send Medicare Part D notices to Medicare-eligible individuals. These notices inform individuals whether the plans’ prescription drug coverage is “creditable coverage” (actuarially equivalent to (or better than) Medicare’s standard Part D coverage) or “non-creditable coverage” (on average not as good as Medicare Part D). Model Notices are available here on the website for the Centers for Medicare and Medicaid Services (CMS), in both English and Spanish. The Notices have not changed since last year.
Leavitt clients who want a Word version of the notices can contact their Leavitt advisors.
Action Steps for Employers – Before October 15th
- Determine if your prescription drug coverage is creditable or non-creditable. If you offer more than one benefit option, it’s entirely possible that one option is creditable and the other is not. If you offer insured coverage, ask your carrier. If you offer self-funded benefits, ask your TPA, but if your TPA won’t make that determination for you, click here for the CMS explanation of how to make a creditable coverage determination.
- This is entitled “Creditable coverage simplified determination” – note that “simplified” does not mean “simple.”
- Customize the appropriate model Notice(s). You will need to add contact information and also information on whether an individual who drops employer-sponsored coverage can later re-enroll.
- Decide whether you will send the Notice to all enrollees or only to those who are Medicare-eligible. Although the requirement is only that “Medicare-eligible” individuals be provided this notice, most employers provide it to all plan participants and dependents, because of the practical difficulty of knowing who is Medicare-eligible.
- Be sure to include COBRA qualified beneficiaries and enrolled retirees, as well as active employees.
- If you send the Notice to all employees, be sure to tell them to share the Notice with all family members as well.
- Decide whether you will mail the Part D notices, or send them electronically to employees who have job-related electronic access. You can also post the Notice(s) on your Intranet and send all employees a link to the Notice(s). If one benefit option is creditable and the other is not, be sure to specify which one is and is not, so participants will access the correct Notice for the plan in which they are enrolled.
- For enrollees who do not have job-related electronic access to your Intranet – such as COBRA enrollees or retirees – you must either obtain their prior written consents to receive this Notice electronically or you must furnish them a paper copy of it (you can send them by first class mail).
- If you sent out Open Enrollment packets prior to October 15th and included the Medicare Part D notices in the Open Enrollment packets, you do not need to send them again separately. Employers often include the Part D Notices in Open Enrollment materials to avoid the extra cost and administrative burden of sending them separately.
Later Action Items
- You must send updated Part D notices later: 1) if your prescription drug coverage changes from creditable to non-creditable, or vice-versa; 2) if an individual requests a copy of the Notice; and 3) when an individual first enrolls in your group health plan.
- An additional but separate requirement on plan sponsors is to notify CMS online annually that they have sent out these Part D notices. That online notice to CMS is due within 60 days after the start of the plan year (i.e., by March 1 for calendar year plans). Click here for information.
- Additional information is available on the main CMS webpage that provides guidance on “creditable coverage.” Click here.
- The Notice requirement and October 15th deadline applies for all group health plan sponsors who provide prescription drug coverage, regardless of plan year, plan size, employer size, employer type (private sector, governmental or church), or whether the plan is insured or self-funded, grandfathered or not, union or non-union.
- If you offer coverage through a multiple employer welfare arrangement (MEWA), the sponsor of the MEWA (not each employer member) must send the Part D Notices to MEWA participants.
- If you offer coverage through a union plan, the Union that sponsors the plan must send the Medicare D notice to Medicare-eligible plan participants.
- The reason the deadline is October 15th is because the annual Medicare enrollment period for Part D, Prescription Drug coverage is October 15-December 7, and individuals eligible for group health plan coverage need to know before October 15 whether their coverage is creditable or not so they do not unwittingly incur a late enrollment penalty. Individuals will incur late enrollment penalties if, after becoming eligible for Medicare Part D coverage, they have 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.”
- The Medicare Part D prescription drug program was added to Medicare by the Medicare Prescription Drug, Improvement and Modernization Act of 2003. See Part D of Title XVIII of the Social Security Act. Prescription drug coverage under Medicare became available starting January 1, 2006.
- You can read the regulations at: 42 CFR 423.56. https://www.law.cornell.edu/cfr/text/42/423.56