As you know, if you as an employer offer prescription coverage to any Medicare Part D eligible employees (whether or not retired), or Medicare Part D Medicare-eligible spouses or dependents, you must provide those individuals with a Notice of Creditable or Non-Creditable Coverage to advise them whether your drug plan’s total gross value is at least as valuable as the standard Part D coverage (i.e., creditable). Medicare Part D notices must be provided to Medicare-eligible individuals prior to October 15th of each year.
The initial notices were due by November 15, 2005 and have been modified numerous times. The newest model notices and guidance were issued for use after April 1, 2011. Therefore, any notices you send from this point forward must conform to the new guidelines. Use of the former model notices will not suffice.
As a reminder, there are five instances in which such notice must be provided: (1) prior to an individual’s initial enrollment period for Part D; (2) prior to the effective date of enrollment in your company’s prescription drug coverage; (3) upon any change in your plan’s creditable status; (4) prior to the annual election period for Part D (which begins each October 15); and (5) upon the individual’s request.
Providing the notice above is important as a late enrollment penalty will be assessed to those persons who go 63 days or longer without creditable coverage (for example, if they enroll in an employer’s prescription plan which is not as valuable as the Part D coverage instead of enrolling directly in the Medicare Part D coverage).
If your plan does not offer creditable prescription drug coverage and if the Part D eligible person enrolls in your plan instead of the Part D plan for at least 63 days, a permanent late enrollment penalty of 1% of the premium is added to the Medicare premium for each month the person does not enroll in Part D.
Please contact us if you need assistance with your Notice of Creditable (or Non-Creditable) Coverage.
Reminder: Submit Medicare Part D Notice to CMS
As discussed above, group health plans offering prescription drug coverage are required to disclose to all Part D-eligible individuals who are enrolled in or were seeking to enroll in the group health plan coverage whether such coverage was “actuarially equivalent,” i.e., creditable. (Coverage is creditable if its actuarial value equals or exceeds the actuarial value of standard prescription drug coverage under Part D.) This notice is required to be provided to all Part D eligible persons, including active employees over age 65.
The regulations also require group health plan sponsors with Part D eligible individuals to submit a similar notice to the Centers for Medicare and Medicaid Services (“CMS”). Specifically, employers must electronically file these notices each year through the form supplied on the CMS website.
The filing deadline is 60 days following the first day of the plan year.
At a minimum, the Disclosure to CMS Form must be provided to CMS annually and upon the occurrence of certain other events including:
1) Within 60 days after the beginning date of the plan year for which disclosure is provided;
2) Within 30 days after termination of the prescription drug plan; and
3) Within 30 days after any change in creditable status of the prescription drug plan.
The Disclosure to CMS Form must be completed online at the CMS Creditable Coverage Disclosure to CMS Form web page.
The online process is composed of the following three step process: (1) Enter the Disclosure Information; (2) Verify and Submit Disclosure Information; and (3) Receive Submission Confirmation.
The Disclosure to CMS Form requires employers to provide detailed information to CMS including but not limited to, the name of the entity offering coverage, whether the entity has any subsidiaries, the number of benefit options offered, the creditable coverage status of the options offered, the period covered by the Disclosure to CMS Form, the number of Part D eligible individuals, the date of the notice of creditable coverage, and any change in creditable coverage status.
For more information about this disclosure requirement (instructions for submitting the notice), please see the CMS website for updated guidance.
As with the Part D Notices to Part D Medicare-eligible individuals, while nothing in the regulations prevents a third-party from submitting the notices (such as a TPA or insurer), the ultimate responsibility falls on the plan sponsor.
For more information on this issue, please contact Elizabeth H. Latchana at 517.377.0826 or firstname.lastname@example.org. Elizabeth Latchana is an accomplished attorney, specializing in employee health and welfare benefits. Recently recognized for her outstanding legal work, she was selected by some of Michigan’s leading lawyers for inclusion in The Best Lawyers in America 2014 for Employee Benefits (ERISA) Law. Ms. Latchana has taken a prominent role in educating and advising organizations on the ever-evolving law, that may well be the largest change ever to health care in the United States, commonly known as health care reform. Her expertise also includes ERISA, COBRA, Cafeteria Plans, Wrap Plans, Health Savings Accounts (HSAs), and Health Reimbursement Arrangements (HRAs).