Health plan sponsors must notify the Centers for Medicare and Medicaid Services (CMS) within 60 days from the beginning of the plan year (contract year, renewal year) as to whether their group health plan Prescription Drug coverage is “creditable coverage” under Medicare Part D. For calendar year plans, this deadline is March 1st. This notice can only be made by using the Online Disclosure to CMS Form on the CMS website. The website also requires the plan sponsor to report the date they sent the Medicare Part D notices to Medicare-eligible plan participants.
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.
Group health plans that offer prescription drug coverage must also provide annual notice to the Centers for Medicare and Medicaid Services (CMS), through the CMS website, regarding whether their prescription drug coverage was, for the prior plan year, “creditable coverage”
A penalty will be imposed on a participant if, after becoming eligible for Medicare Part D coverage, there is a lapse of “creditable” prescription drug coverage for a period of at least 63 days. 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.
When are the Notices to Participants and Notices to CMS Required?
Medicare Part D Notice to CMS: must be made within 60 days from the beginning of the plan year (or contract date or renewal date, for small plans that do not file Form 5500s and so do not specify a plan year). For calendar year plans, this means notice must be provided to CMS no later than March 1st. As noted above, notice must be made at the CMS website using the Online Disclosure to CMS Form.
Completing the online Form is fairly simple. Employers must input the Plan sponsor’s name, Federal ID number, address, phone number, type of coverage (a drop-down box lists employer-sponsored GHP, Union GHP, government GHPs, church GHP, etc.), how many prescription drug options are offered under this coverage (e.g., if you offer both an HMO and a PPO, enter “2”), and whether all or some of the options are creditable or non-creditable. Be sure to obtain a submission confirmation (step #3).
Plan sponsors also 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, the main CMS webpage that provides guidance on “creditable coverage” is: http://www.cms.gov/CreditableCoverage/
Medicare Part D Notices to Participants: must be provided by October 15th. The enrollment period for Prescription Drug coverage is October 15th through December 7th. All employers and Unions; multiple employer welfare arrangements (MEWAs); federal, state and local government employers; and churches must provide this notice.
Additional notices must be provided throughout the year when:
- The employer-provided coverage changes from creditable to non-creditable, or vice-versa
- The individual requests a copy of the notice
- An individual first enrolls in the employer plan
The Part D Notice must be provided not only to Medicare-eligible active working employees and their dependents, but also to 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.
Most plan sponsors use the Model Medicare Part D Notices provided by CMS to notify affected plan participants. Click here for the Notice of Creditable Coverage. (If you are reading this in hard copy,you can go to: https://www.cms.gov/Medicare/Prescription-Drug-Coverage/CreditableCoverage/Downloads/ModelCreditableCoverageDisclosureNotice051711.pdf)