Group health plan sponsors that provide prescription drug coverage to Medicare Part D eligible individuals must disclose whether their plan is creditable. Creditable refers to whether the actuarial value of the prescription drug coverage equals or exceeds that of the standard Part D coverage. Plan sponsors must disclose their creditable status in two ways: filing with the Centers for Medicare and Medicaid Services (CMS) and distributing a notice to eligible plan participants.
Disclosures to CMS must occur annually and upon the occurrence of certain other events:
- Within 60 days after the beginning date of the plan year for which disclosure is provided.
- Within 30 days after termination of the prescription drug plan; and
- Within 30 days after any change in creditable status of the prescription drug plan.
Disclosures to CMS must be completed and sent electronically through their website.
Notice to plan participants is also required. The notice helps enrollees who are covered by Medicare make informed and timely decisions about whether and when to enroll in Medicare Part D, and avoid potential late enrollment penalties. The deadline for compliance is October 15 of each year.
Many insurance carriers send the notice annually, and employers are not required to provide their own notice if participants receive a compliance notice from the insurance company or employer’s claims administrator. Employers, however, should exercise caution as some carriers may only send the notice to individuals at certain age thresholds thus potentially missing eligible employees.
It is often difficult for employers who distribute the notice to identify all individuals (including dependents) who may be eligible for Medicare. Many employers satisfy this requirement by including the notice in enrollment materials or in separate mailings provided to all employees who participate in the employer-sponsored plan. Because the notice must be provided before October 15th each year, employers with open enrollment in November and December cannot rely on including the notice in enrollment materials to satisfy the annual requirement.
There are also other times that employers are required to provide this notice in addition to the annual requirement. Below is a list of times at which notice of creditable or non-creditable coverage is required:
- Prior to an individual’s initial enrollment period for Part D
- Prior to the coverage effective date for any Medicare-eligible individual joining your plan
- Whenever prescription drug coverage ends or creditable status changes
- Upon the request of the individual the model notices can be found at http://www.cms.gov/CreditableCoverage.