Updated March 2022
Employers sponsoring a plan offering pharmacy benefits to Medicare-eligible employees or former employees are required to do more than just provide a Creditable or Non-creditable Coverage Notice to those participants – the oft forgotten disclosure to the Centers for Medicare and Medicaid (CMS) is also required. If you are an employer who offers pharmacy benefits to Medicare-eligible individuals, you are required to submit online a creditable coverage disclosure form to CMS for each plan (only one disclosure is required if the plan year is the same for the entire company including subsidiaries, divisions, lines of business, etc.). If you are a calendar-year plan, that deadline is March 2 this year – or for all other plans: 60 days after the beginning of the plan year. The good news is: It is really quite easy to do once you remember to do it and know the creditable status of your plan. Here is what else you need to know about CMS Creditable Coverage Disclosure.
As a reminder: “Creditable” means the group health plan’s expected paid claims for prescription drug coverage is at least as much as the expected paid claims under the standard Medicare Part D prescription drug plan. “Non-creditable” means the employer plan coverage is not as good as Medicare Part D’s prescription drug benefit. For more help making the creditability determination, see the CMS guide.
There are two ways to be deemed a “creditable” plan (meaning, the employer health plan offers prescription coverage as good as or better than Medicare Part D prescription coverage. The safe harbor simplified rule states a plan to be creditable if:
- covers brand-name and generic prescriptions;
- provides reasonable access to retail providers;
- pays at least 60% of participants’ prescription drug expenses (on average); and,
- satisfies at least one (1) of the following:
- the prescription drug coverage either has no annual benefit maximum or has a maximum annual benefit of at least $25,000;
- the prescription drug coverage has an actuarial expectation that the amount payable by the plan will be at least $2,000 annually per Medicare eligible individual; or
- for prescription drug benefits integrated with group health coverage, the prescription coverage has no more than a $250 deductible per year; either has no annual benefit maximum or has a maximum annual benefit payable by the plan of at least $25,000; and has a lifetime combined benefit maximum limit of at least $1 million.
The other method to determine credibility is an actuarial determination.
• Within 60 days after the beginning of each plan year (no later than March 1st for calendar year plans)
• Within 30 days after a change in the creditability status of any plan
• Within 30 days after the termination of any prescription drug plan
A copy of the disclosure form and user manual can be found at on the CMS website.
Disclosure Form Required Information
The online form is a basic fill-in-the-blank document that CMS predicts will take just minutes to complete. The link also includes helpful information and guidance to assist you with disclosure to CMS. To speed up the process, you will need the following:
- Name of entity offering coverage. This is your company name.
- Federal ID or tax ID number.
- Street address and phone number of company headquarters.
- The number of prescription drug options offered under this coverage. This is the total number of pharmacy benefit options offered to Medicare eligible individuals. This includes all options regardless of the pharmacy benefit insurer/administrator.
Tips for Completing the Form
1. Select the type of coverage. The form offers a list of choices. You should select “Employer Sponsored Plan” under Group Health Plan.
2. Select the creditable coverage statement that is true for the plans you offer. The choices are:
• All options are creditable (this will be the option for most employers who offer a Medicare Part D prescription drug plan)
• All options offered are non-creditable
• There are some creditable or non-creditable options offered
3. Once a choice is selected, you’ll see a box with additional questions displayed. The questions are specific to the creditable coverage statement chosen.
• Number of individuals covered: you can estimate this number
• Date of notice of creditable coverage: use whatever date you sent the notice of creditable coverage out to your employees
• Change to a previous disclosure: the answer to this question is “No” for the initial disclosure
4. Fill in name, title and email of the company’s authorized individual, plus date of disclosure. This is the last piece of information required. Click “submit” and you are done!
For additional guidance and questions about the Creditable Coverage disclosure, we recommend consulting CMS. You can find them online. Employers go online to report using the online creditable coverage disclosure form – where they may also go to see complete details.
Plan Creditable Status Notice for Individuals
Employer should also be sure not to forget distribution of the Creditable/Non-creditable Coverage Notice to participants. While the law only requires providing the notice to Medicare-eligible participants, it is best practice to provide to all participants should an employee or retiree have a spouse who is eligible for Medicare Part D. Be sure to always document distribution of required notices – whether keeping a copy of the email or jotting it down. You may find out more about distribution rules here. Model notices can always be found on the CMS Model Notices website.
Employers who offer prescription drug coverage to individuals who are eligible for Medicare Part D should ensure they go online and tell CMS whether the prescription drug coverage you offer is “Creditable” or “Non-creditable” with Medicare Part D Prescription drug coverage within 60 days of the beginning of their renewing plan year. For calendar year plans, the deadline is March 2 if the 1st falls on a Sunday. Non-calendar year plans should calculate due dates. Employers who have failed to previously report will not be penalized. Any consequence would likely be in the form of additional requests for information from CMS attempting to do a data match for which this reporting is intended to be part of.
For other great comprehensive details, see the additional Leavitt Group education on this topic contained in this article.