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Employers must disclose whether their drug benefit covers as much as a standard Medicare Part D plan
Each year, group health plan sponsors that provide prescription drug coverage to individuals eligible for Medicare Part D must disclose to the CMS 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 disclosure to CMS by March 1, 2017.
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 furnish Part D-eligible individuals with a notice disclosing the creditable or non-creditable status of their coverage before the beginning of the Medicare Part D annual enrollment period and at certain other times. Plan sponsors must also disclose to CMS, on an annual basis and at certain other times, whether the coverage they provide is creditable or non-creditable. The deadline for this year's disclosure to CMS by calendar year plans is drawing near.
Creditable Coverage Disclosures to CMS
Plan sponsors generally must disclose creditable coverage status to CMS within 60 days after the beginning of each plan year. 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 (or non-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.
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 March 1, 2017.
[SHRM members-only toolkit: Communicating with Employees About Health Care Benefits Under the Affordable Care Act]
Not Just for Retiree Coverage
All Part D-eligible individuals covered under an employer's prescription drug plan—regardless of whether the coverage is primary or secondary to Medicare Part D—should be included in the disclosure. "Part D-eligible individuals" are generally age 65 and older or under age 65 and disabled, and include active employees and their dependents, COBRA participants and their dependents, and retirees and their dependents. Even employers without retiree coverage may need to file the disclosure.
Information Needed to Complete the Disclosure
In preparing the disclosure to CMS, plan sponsors need to:
Individuals who will become Part D-eligible after the start of the plan year should not be included in the count for that year. However, 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 March 1, 2017.
Kin Chan is a consultant with, and Leslye Laderman, J.D.,LLM, is a principal at, the Knowledge Resource Center of Conduent HR Services. This article originally appeared in the Feb. 10, 2017, issue of Conduent's For Your Information. © 2017 Conduent HR Services. All rights reserved. Reposted with permission.
Related SHRM Article:
Oct. 14 Deadline for Medicare Part D Coverage Notices [to Employees], SHRM Online Benefits, August 2016
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