Employers whose health care plans include prescription drug benefits for active employees or retirees who are Medicare-eligible must notify those covered individuals 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.
These plan sponsors must also report whether their drug benefit is creditable coverage to the federal Centers for Medicare & Medicaid Services (CMS) by March 1 for calendar-year plans.
The disclosure obligation applies to all plan sponsors that provide prescription drug coverage, even those that do not offer prescription drug coverage to retirees. Medicare Part D, which became effective in 2006, is a federal program to subsidize the cost of private prescription drug plans.
March 1 Disclosure to CMS
As part of the disclosure requirements under Medicare Part D, employer-sponsored group health plans that offer prescription drug coverage to Part D-eligible individuals are required to submit an electronic disclosure notice to the CMS on an annual basis, reporting whether that coverage is creditable or non-creditable.
A plan sponsor must submit a new disclosure to CMS no later than 60 days after the beginning of each plan year—i.e., by March 1 for calendar year plans.
This requirement applies not only to employer-sponsored retiree health plans but to employer-sponsored plans extended to active employees and their covered spouses who are enrolled or are Medicare-eligible (generally speaking, age 65 or over).
A plan sponsor is required to provide the disclosure notice through completion of the Creditable Coverage Disclosure Form on the CMS Creditable Coverage website. This is the sole method for complying with the CMS disclosure requirement.
Oct. 15 Notification to Part D-eligible Individuals
The 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 at other times, including:
• Before an individual’s initial opportunity to enroll in Part D (generally satisfied by the requirement to provide notice annually 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.
According to the Marsh Consulting Group's benefits blog:
Notices do not have to be sent as a separate mailing; they can be provided as part of enrollment/renewal or other plan information materials. If the notice is included with other plan information, the notice must be “prominent and conspicuous.” Additionally, a single notice can be provided to a covered Medicare individual and all his or her covered Medicare-eligible dependents. However, a separate notice is required “if it is known that any spouse or dependent that is Medicare eligible resides at a different address than from where the participant/policyholder materials were provided.”
The guidance also clarifies that notices can be electronically distributed. These regulations permit electronic distribution to participants “who have the ability to access electronic documents at their regular place of work if they have access to the plan sponsor’s electronic information system on a daily basis as part of their work duties.”