Employers whose health care plans include prescription drug benefits must notify Medicare-eligible employees by Oct. 15 of each year whether their drug benefit is "creditable coverage," meaning that it is expected to cover, on average, as much as the standard Medicare Part D prescription drug plan.
Medicare Part D, which became effective in 2006, is a federal program to subsidize the cost of private prescription drug plans.
The federal Centers for Medicare & Medicaid Services (CMS) requires that companies provide the notice before the annual Medicare Part D election period, Oct. 15 to Dec. 7 each year for coverage beginning Jan. 1.The CMS Creditable Coverage website provides complete text of the guidance and sample disclosure notices. Plan sponsors should carefully review and customize these notices to ensure they accurately reflect their plan provisions.
The creditable-coverage notice must be given to all Part D-eligible individuals who are covered under, or apply for, an employer's prescription drug benefits plan. This requirement applies to Medicare beneficiaries who are active employees and those who are retired, as well as Medicare beneficiaries who are covered as spouses under active or retiree coverage.
CMS also requires plan sponsors to provide notice of their creditable-coverage status to Part D-eligible members:
- Before an individual’s initial opportunity to enroll in Part D (generally satisfied by the requirement to provide notice to all Medicare- eligible employees prior to Oct. 15).
- Before the effective date of coverage for any Medicare-eligible individual that joins the employer's plan.
- When the plan's prescription drug coverage ends or its creditable coverage status changes.
- Upon an individual's request.
Related SHRM Articles:
Medicare Part D 'Creditable Coverage' Disclosures Due [to CMS] March 1, SHRM Online Benefits, February 2014
Helping Those Turning 65 to Navigate Medicare, SHRM Online Benefits, July 2013
Related External Articles:
Medicare Part D creditable/non-creditable coverage notices due before October 15, Buck Consultants, September 2013
Changes to Medicare Part D Plan Parameters for 2014, McGraw Wentworth, May 2013
2014 Medicare Part D Amounts Will Be Lower than 2013 Amounts, Segal Consulting, April 2013
CMS Releases 2014 Medicare Part D Benefit Parameters, Buck Consultants, Apr 2013
SHRM Online Benefits page
SHRM Online Health Care Reform Resource Page
SHRM Online Wellness Programs Resource Page