| WHO | Employers who sponsor group health plans that offer prescription drug coverage (All plans: large and small; insured and self-insured; grandfathered and not; government, private sector, churches, not-for-profits) |
| WHAT | Must provide a Medicare Part D notice to Medicare-eligible individuals, stating whether the prescription drug benefits offered provide creditable or non-creditable coverage. |
| WHEN | Before October 15th of each year |
| WHERE | CMS Model notices are found here |
| WHY | So Medicare-eligible individuals can make informed decisions whether to enroll in Medicare Rx or in the employer’s plan, so they do not unwittingly incur late enrollment penalties for not enrolling in Medicare when first eligible. |
It’s that time of year again: teachers and students are returning to school, children are planning their Halloween costumes, and employers who sponsor group health plans are preparing to send out Medicare Part D notices to Medicare-eligible individuals. These notices – which inform individuals whether or not the employer plans’ prescription drug coverage is “creditable coverage”— must be sent prior to October 15th, 2017, the start date of the Medicare annual enrollment period for Part D, Prescription Drug coverage. (The enrollment period is October 15-December 7.)
The 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.
You can mail the Part D notices, or send them electronically to employees who have job-related electronic access. For those who do not – 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).
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.
Model Notices are available here on the website for the Centers for Medicare and Medicaid Services (CMS). These are in English and Spanish, but are in .pdf format. There are separate Model Notices for Creditable Coverage and Non-Creditable Coverage.
Leavitt clients who want a Word version of the notices can contact their Leavitt advisor.
Additional Details on the Disclosure Requirements
- 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.
- Plan sponsors must send Part D notices again if the employer-provided coverage changes (from creditable to non-creditable, or vice-versa), if an individual requests a copy of the notice, and when an individual first enrolls in the employer plan.
- Unions that sponsor union plans must send the Medicare D notice to Medicare-eligible plan participants. Sponsors of multiple employer welfare arrangements (MEWAs) must send the notices to MEWA participants.
- 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. See the last paragraph of this article for details.
- Additional information is available on the main CMS webpage that provides guidance on “creditable coverage.” Click here.
Background
The Medicare Modernization Act requires group health plan sponsors that offer prescription drug coverage to notify Medicare-eligible plan participants (employees and dependents) whether their prescription drug coverage is “creditable” or “non-creditable.” Coverage is creditable if it is at least actuarially equivalent to Medicare’s standard Part D coverage, which means the coverage is expected to pay on average at least as much as the Medicare prescription drug coverage. For CMS guidance on determining whether coverage is creditable or not , click here.
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.
Annual Notice to CMS Also Required, though not by October 15th
Additionally, plan sponsors are required to notify CMS annually, via the CMS website. Click here for information. 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.)