Oct. 14 Deadline Nears for 2020 Medicare Part D Coverage Notices

Employers must provide notices to Medicare-eligible individuals offered a drug plan

By Leslye Laderman and Richard Stover © Buck September 11, 2020
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Oct. 14 Deadline Nears for 2020 Medicare Part D Coverage Notices

Plan sponsors that offer prescription drug coverage must provide notices of "creditable" or "non-creditable" coverage to Medicare-eligible individuals before each year's Medicare Part D annual enrollment period—this year, by Oct. 14.

Prescription drug coverage is creditable when it is at least actuarially equivalent to Medicare's standard Part D coverage and non-creditable when it does not provide, on average, as much coverage as Medicare's standard Part D plan.

The notice obligation is not limited to retirees and their dependents but also includes Medicare-eligible active employees (generally, those age 65 and older, and certain people with disabilities who are under age 65) and their dependents and Medicare-eligible COBRA participants and their dependents.

Background

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 requires group health plan sponsors that provide prescription drug coverage to inform individuals eligible for Medicare Part D whether the plan's coverage is creditable or non-creditable. The Centers for Medicare & Medicaid Services (CMS) has provided a Creditable Coverage Simplified Determination method that plan sponsors can use to determine if a plan provides creditable coverage.

Knowing if their prescription drug coverage is creditable allows individuals to make informed decisions about whether to remain in their current prescription drug plan or enroll in Medicare Part D during the Part D annual enrollment period. Individuals who do not enroll in Medicare Part D during their initial enrollment period (IEP), and who subsequently go at least 63 consecutive days without creditable coverage (e.g., because they dropped their creditable coverage or have non-creditable coverage), generally will pay higher premiums if they enroll in a Medicare drug plan at a later date.

Who Must Receive the Notice?

The notice must be provided to all Medicare-eligible individuals who are covered under, or eligible for, the sponsor's prescription drug plan, regardless of whether the plan pays primary or secondary to Medicare. Thus, the notice obligation is not limited to retirees and their dependents but also includes Medicare-eligible active employees and their dependents and Medicare-eligible COBRA participants and their dependents.

[SHRM members-only toolkit Communicating with Employees About Health Care Benefits Under the Affordable Care Act]

Notice Requirements

The Medicare Part D annual enrollment period runs from Oct. 15 to Dec. 7. Each year, before the enrollment period begins (i.e., by Oct. 14), plan sponsors must notify Medicare-eligible individuals whether their prescription drug coverage is creditable or non-creditable. The October 14 deadline applies to insured and self-funded plans, regardless of plan size, employer size or grandfathered status. Part D eligible individuals also must be given notice of the creditable or non-creditable status of their prescription drug coverage at the following times:

  • Before an individual's initial enrollment period for Part D.
  • Before the effective date of coverage for any Medicare-eligible individual who joins an employer plan.
  • Whenever prescription drug coverage ends or creditable coverage status changes.
  • Upon the individual's request.

According to CMS, the requirement to provide the notice prior to an individual's IEP will also be satisfied if the notice is provided to all plan participants each year before the beginning of the Medicare Part D annual enrollment period.

Model notices that can be used to satisfy creditable/non-creditable coverage disclosure requirements are available in both English and Spanish on the CMS website. Plan sponsors that choose not to use the model notice must provide a disclosure that meets prescribed content standards. The required notices may be provided in annual enrollment materials, separate mailings, or electronically. Whether plan sponsors use the CMS model notices or other notices that meet prescribed standards, they must provide the required disclosures this year no later than October 14.

What If Mo Prescription Drug Coverage Is Offered?

Because the notice informs individuals whether their prescription drug coverage is creditable or non-creditable, no notice is required when prescription drug coverage is not offered.

Plan sponsors may provide an electronic notice to plan participants who have regular work-related computer access to the sponsor's electronic information system. However, plan sponsors using this disclosure method must inform participants that they are responsible for providing notices to any Medicare-eligible dependents covered under the group health plan.

Electronic notice may also be provided to employees who do not have regular work-related computer access to the plan sponsor's electronic information system and to retirees or COBRA qualified beneficiaries, but only with a valid email address and their prior consent. Before individuals can effectively consent, they must be informed of the right to receive a paper copy, how to withdraw consent, how to update address information, and any hardware/software requirements to access and save the disclosure. In addition to e-mailing the notice to the individual, the sponsor must also post the notice (if not personalized) on its website.

Exception for EGWPs

Employers that provide prescription drug coverage through a Medicare Part D Employer Group Waiver Plan (EGWP) are not required to provide the creditable coverage notice to individuals eligible for the EGWP.

Don't Forget the Disclosure to CMS

Plan sponsors that provide prescription drug coverage to Medicare-eligible individuals must also disclose to CMS annually whether the coverage is creditable or non-creditable. This disclosure must be made no more than 60 days after the beginning of each plan year.

In Closing

Plan sponsors that offer prescription drug coverage must determine whether their drug plan's coverage satisfies CMS's creditable coverage standard and provide appropriate creditable/non-creditable coverage disclosures to Medicare-eligible individuals, this year no later than Oct. 14.

Leslye Laderman, JD, LLM, is a principal in the Knowledge Resource Center at HR consultancy Buck. Richard Stover, FSA, MAAA, is a principal at the consultancy. The original version of this article appeared in the Aug. 27, 2020, issue of For Your Information, produced by Buck's Knowledge Resource Center. © 2020 Buck Global LLC. All rights reserved. Republished with permission.


Related SHRM Article:

Reminder: Medicare Part D Notices Are Due to CMS by Feb. 29, SHRM Online, February 2020

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