Background
The Medicare Modernization Act requires group health plan sponsors that provide prescription drug coverage to notify individuals who are eligible for Medicare Part D whether the plan’s coverage is creditable or non-creditable. Creditable coverage means that the plan is expected to cover, on average, as much as the standard Medicare Part D prescription plan.
Disclosure of whether the group health plan prescription drug coverage is creditable allows individuals to make an informed decision about whether to remain in the group’s 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, and who subsequently go at least 63 days without creditable coverage generally pay higher premiums if they enroll in a Medicare drug plan later.
Summary
Who Needs to Notify Their Employees?
All employers regardless of size, who sponsor group health plans with prescription drug coverage must provide the annual disclosure notice to Medicare-eligible individuals before Oct. 15, 2022—the start date of the annual enrollment period for Medicare Part D.
Which Plan Participants Do I Need to Notify?
- You are required to give the creditable-coverage notice 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. COBRA participants must also be notified.
- To alleviate the responsibility of determining who is a “Medicare-eligible” participant, HR Knowledge recommends that you provide this notice to ALL employees and COBRA participants enrolled in your employer-sponsored medical plans.
Disclosure Requirement #1
If you’ve already provided the Creditable/Non-Creditable Notice to your staff since your last renewal date, you do not need to provide it again.
If you have not provided the Notice to your staff prior to October 14, 2022 (for your current plan year), you must communicate your plan(s) status. We recommend that you conduct a blanket mailing to all participants and their dependents (including COBRA participants), because you may not be aware of a dependent’s Medicare eligibility (such as a spouse over 65 or disabled dependents). If you are aware that a covered spouse or dependent child resides at a different address from the employee, you must mail a separate notice to that address. Alternatively, electronic delivery is allowed for employees who have daily access to the plan sponsor’s electronic information system as part of their work duties. The employer must use reasonable and appropriate means to ensure that the system for furnishing the documents results in actual receipt, and a notice must be provided to each recipient at the time the electronic materials are sent, telling them the significance of the document. Additionally, a paper copy must be made available upon request.
This mailing must be conducted prior to the October 15, 2022, deadline.
Disclosure Requirement #2
As a health plan sponsor, your organization must notify CMS of your plan’s creditable coverage status on an annual basis. You are required to provide the disclosure notice to CMS by completing the disclosure form on the CMS webpage. The Disclosure to CMS Form is available on the left-hand side menu, under Creditable Coverage. Instructions for completing the form are in the same location, titled, Disclosure to CMS Guidance and Instructions. Completing and submitting the form online is the only allowable way to provide CMS with the notice. You must complete the disclosure annually, no later than 60 days from the beginning of a plan year (contract year, renewal year), within 30 days after the termination of a prescription drug plan, or within 30 days after any change in creditable coverage status.
Each employer must report to CMS directly, HR Knowledge is unable to do this on your behalf.
Employer Next Steps
- View the HR Knowledge Compliance Overview.
- Determine if you’ve provided the Creditable/Non-Creditable Notice to eligible members for the current plan year.
- Disclosure #1: Communicate your plan(s) status by sending a blanket mailing to all participants and their dependents (including COBRA participants). This mailing must be conducted prior to the October 15, 2022, deadline.
- If you are an HR Knowledge brokerage client and need a copy of your Creditable/Non-Creditable Notice, please contact Benefit Support for assistance.
- If you are not an HR Knowledge brokerage client, you can access the template letters on the CMS website.
- The CMS website also has the template available in Spanish.
- Disclosure #2: Complete and submit the CMS disclosure registration online.
- If you have further questions regarding this e-Alert, please contact our Benefits Team.
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This content is provided with the understanding that HR Knowledge is not rendering legal advice. While every effort is made to provide current information, the law changes regularly and laws may vary depending on the state or municipality. The material is made available for informational purposes only and is not a substitute for legal advice or your professional judgment. You should review applicable laws in your jurisdiction and consult experienced counsel for legal advice. If you have any questions regarding this content, please contact HR Knowledge at 508.339.1300 or email us.
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