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Employers must show if their drug benefit is as generous as a Medicare Part D plan
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Each year, employers that provide prescription drug coverage to workers, dependents or retirees age 65 or older—individuals who are eligible for Medicare Part D—must disclose to the federal Centers for Medicare and Medicaid Services (CMS) whether their drug plan is "creditable" (at least as good as Medicare Part D's prescription drug benefit) or "noncreditable" (not as good).
Plan sponsors must complete the annual online disclosure within 60 days after the beginning of the plan year—by March 1 for calendar-year plans. Disclosure is made online using the
Disclosure to CMS Form on the CMS website.
Employer plans that offer drug coverage to any Medicare-eligible employee, dependent or retiree at the beginning of the plan year must file annual disclosures, according to
guidance and instructions posted on the CMS website. Plans that do not offer drug coverage to anyone who is Medicare-eligible are exempt from the disclosure requirement.
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.
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. However, "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
exempt from the CMS disclosure requirement for individuals who participate in the Part D plan," explained Kin Chan and Leslye Laderman, consultants at New York City-based Conduent HR Services,
in a blog post.
A Change for 2018 Filing
"Although the information requested by CMS is virtually the same as that asked for in prior years, the format has been modified slightly" for this year's filing, said Lisa Carlson, a senior attorney at Kansas City, Mo.-based Lockton Compliance Services, an employee benefits advisory firm. "Questions relating to your specific plan and population do not appear until after you identify whether your coverage is creditable, noncreditable or a combination of the two. This has caused some confusion, as it looks slightly different than the prior online form since expected questions are not immediately seen."
Information Needed for Filing
In preparing to disclose the required information to the CMS, Chan and Laderman advised employers to:
"Plan sponsors should review the instructions carefully before completing the disclosure form to make sure that they have all necessary information," Chan and Laderman advised.
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, they noted. This includes both a change in the coverage offered that makes it no longer creditable (or that makes it become creditable) and the termination of a creditable coverage option.
Similarly, a new disclosure form must also be submitted to CMS within 30 days after the termination of a prescription drug plan.
[SHRM members-only toolkit:
Designing and Managing Flexible Benefits (Cafeteria) Plans]
Annual Employee Notification Due Oct. 15
In addition to the annual CMS disclosure, plan sponsors that offer prescription drug coverage must notify Medicare-eligible employees, retirees and dependents at least annually about whether the drug coverage being offered is creditable or noncreditable. Notices to individuals are required each year before the annual Part D enrollment window, which opens each Oct. 15.
In addition, notices must be provided:
"A plan need only supply the notice once every 12 months," Carlson said. Instead of identifying the Medicare-eligible members (including dependents) who must be notified, it may be administratively easier, she advised, to distribute the notices to all covered members in annual open enrollment packets before the deadline.
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