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Leap year alters usual March 1 deadline for employers that provide Rx benefits
Each year, group health plan sponsors that provide prescription drug coverage to individuals eligible for Medicare Part D must disclose to the Centers for Medicare & Medicaid Services whether that coverage
is “creditable” or “non-creditable.” The disclosure obligation applies to all plan sponsors that provide prescription drug coverage, even those that do not offer prescription drug coverage to retirees. Calendar year plans must submit this year’s disclosures to CMS by Feb. 29, 2016.
Individuals who fail to enroll in Medicare Part D prescription drug coverage when first eligible may be subject to late enrollment penalties if they go 63 consecutive days or longer without creditable prescription drug coverage. Prescription drug coverage is “creditable” when it is at least actuarially equivalent to Medicare Part D prescription drug coverage. Because of this potential penalty, both Medicare Part D-eligible individuals and the Centers for Medicare & Medicaid Services (CMS) need to know whether a group health plan’s prescription drug coverage is creditable or non-creditable.
Plan sponsors that provide prescription drug coverage must:
Creditable Coverage Disclosures to CMS
Disclosure is made online using the
Disclosure to CMS Form available on the CMS website. An entity that does not offer outpatient prescription drug benefits to any Part D-eligible individual on the first day of its plan year is not required to complete the CMS disclosure form for that plan year. Plan sponsors that contract directly with Medicare as a Part D plan or that contract with a Part D plan to provide qualified prescription drug coverage are also exempt from the CMS disclosure requirement for individuals who participate in the Part D plan.
In addition to the annual disclosure, plan sponsors must submit a new disclosure form to CMS within 30 days following any change in the creditable coverage status of a prescription drug plan. This includes both a change in the coverage offered so that it is no longer creditable and the termination of a creditable coverage option. A new disclosure form must also be submitted to CMS within 30 days after the termination of a prescription drug plan.
Pointer: The disclosure requirement applies to all plan sponsors that provide prescription drug coverage, even those that do not make prescription drug coverage available to retirees.
Calendar year plans must submit this year’s disclosure to CMS by Feb. 29, 2016.
Information Needed to Complete the Disclosure
In preparing the disclosure to CMS, plan sponsors need to:
Pointer: Individuals who will be or become Part D eligible after the start of the plan year should not be included in the count for that year, but they must be provided a notice of creditable or non-creditable coverage prior to their initial enrollment period for Part D.
Plan sponsors should review the instructions carefully before completing the Disclosure to CMS Form to make sure that they have all necessary information, and calendar year plans should report the information by Feb. 29, 2016.
Richard Stover, FSA, MAAA, is a principal and actuary at Xerox HR Services (formerly Buck Consultants at Xerox). Kin Chan is a consultant in the Xerox HR Services Knowledge Resource Center. This article originally appeared in the Feb. 10, 2016, issue of
For Your Information, produced by Xerox HR Service’s Knowledge Resource Center. © 2016 Xerox Corp. All rights reserved. Republished with permission. Hyperlinks added by SHRM Online.
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