Medicare’s annual open enrollment period begins Oct. 15; before that date, employers that sponsor group health insurance plans that include prescription drug coverage are required to notify Medicare-eligible plan participants. The requirement applies regardless of employer size or whether the group plan is insured or self-funded. To simplify, most employers distribute the notice to all participants regardless of age or status.
Why do I need to do this?
Federal law requires employers to provide eligible employees with information about Medicare Part D prescription drug coverage if their group health plan(s) offer outpatient prescription drug benefits. Plan participants who fail to enroll in Medicare Part D when they’re first eligible may be subject to penalties if they go without “creditable” prescription drug coverage for 63 consecutive days or longer.
As a result, both the Centers for Medicare and Medicaid Services (CMS) and Medicare-eligible participants need information about whether an employer’s group prescription coverage is creditable or noncreditable.
What is the difference between creditable and noncreditable coverage?
Creditable coverage means an employer’s prescription drug coverage is “actuarially equivalent” to the prescription coverage available through Medicare Part D—aka, as good or better.
What should I do now?
Medicare Part D enrollment begins Oct. 15 and runs through Dec. 7, which is why it is important for group health plan participants to receive their employer’s notice before Oct. 15. Notices also may be required after Oct. 15 for new enrollees and/or if your plan’s creditable/noncreditable status changes.
Employers need to do two things now, if they haven’t already:
- Determine whether your group health plan’s prescription drug coverage is creditable or noncreditable for the upcoming year. For insured plans, the insurance carrier will confirm creditable or noncreditable status. For self-funded plans, the plan actuary will determine the plan’s status using CMS guidance.
- Distribute a “Notice of Creditable Coverage” or “Notice of Noncreditable Coverage,” as applicable, to all group health plan participants who are or may become Medicare-eligible in the next year. “Participants” include covered employees, retirees, and spouses; as well as COBRA enrollees.
However, employers often do not know for certain if participants are Medicare-eligible; so for convenience, many employers distribute notices to all participants, regardless of Medicare eligibility. Model notices are available in English and Spanish on the CMS website.
Is this one of those notices that could’ve been an email?
You may distribute the notice by first-class mail to an employee’s home or work address. A separate notice for an employee’s spouse or family member(s) is not required unless they live at different addresses.
The notice is intended to be a standalone document. It may be distributed at the same time as other plan materials, but it should be a separate document. If the notice is incorporated with other materials, it must appear in 14-point font that is bolded, offset, or boxed, and placed on the first page. Alternatively, you can reference on the first page where to find the notice within the material (the reference must be in 14-point font, and bolded, offset, or boxed).
That said, email distribution for the notice is allowed, if employees:
- Have regular access to email as an integral part of their job duties.
- Have access to a printer.
- Are notified that a hard copy of the notice is available at no cost upon request.
- Are informed that they are responsible for sharing the notice with any Medicare-eligible family members who are enrolled in your group plan.
What else should I know?
Separate from the participant notice requirement, employers also must disclose your plan’s creditable or noncreditable coverage status to CMS. To submit this disclosure, use the CMS online tool and follow the prompts. The online tool is the only method allowed for completing the disclosure, and generally takes only five to 10 minutes to complete.
It is due within 60 days after the start of the plan year; for calendar year plans, that is March 1 (or February 29 in a leap year).
Originally posted on Mineral