Employer Compliance Requirement: Medicare Part D Disclosures Due by Mid-October
The Medicare Annual Election Period (AEP) begins on October 15, 2020, and ends on December 7, 2020. During this time, Medicare beneficiaries and Medicare-eligible persons can enroll in, or change, Medicare Advantage plans, Medigap plans, or Medicare Part D Prescription Drug coverage plans.
A Medicare-eligible person who does not enroll in Medicare Part D Prescription Drug Coverage when first eligible (usually at age 65) will face an eventual late enrollment penalty for the entire time he or she is enrolled in Medicare Part D coverage, unless that person has qualifying “creditable” drug coverage from an employer plan. Because of the penalty, which is assessed to any person who does not maintain creditable coverage for more than 62 days after his/her initial Medicare enrollment period, Medicare-eligible persons must be informed by their employer about their drug plans’ “creditable” or “non-creditable” status.
Employers (of any size) providing prescription drug coverage to Medicare-eligible individuals – including both employees and dependents – must distribute notices to such individuals indicating whether their employer-sponsored drug coverage is creditable or non-creditable
When prescription drug coverage is “creditable,” the prescription drug benefit is equivalent to (or richer than) the prescription drug coverage provided by Medicare Part D. That is, the prescription drug coverage provided by the employer-sponsored plan is expected to pay, on average, as much as the standard Medicare Part D Prescription Drug coverage.
“Non-creditable” prescription drug coverage is the opposite; it is less rich than Medicare Part D coverage. In other words, non-creditable coverage means the prescription drug coverage provided by the employer-sponsored plan is not expected to pay, on average, as much as the standard Medicare Part D Prescription Drug coverage.
These required notices, called Medicare Part D Disclosure Notices, must be distributed to all impacted individuals (those who are eligible for Medicare coverage) before the Medicare AEP begins on October 15, 2020.
Employers are likely to turn to you, as their health insurance broker, for help determining whether the prescription drug coverage they sponsor is creditable. They may also seek an understanding of what to distribute to employees – and when. Word & Brown has you covered.
Medicare Part D Charts – Creditable or Non-Creditable Designation
We’ve surveyed our carrier partners and have placed creditable/non-creditable designations in easy-to-reference charts for all carriers’ Small Group plans and Large Group plans. Refer to these charts to determine whether the coverage sponsored by the employer is creditable or non-creditable.
California – Small Group plans
California – Large Group plans
Nevada – Small Group plans
Nevada – Large Group plans
Creditable Coverage Model Notice
The Centers for Medicare & Medicaid Services (CMS) provide model notices to meet these distribution requirements, along with additional information on the required distribution. The model notices must be customized by the employer, as indicated on the model notices, before the employer releases them to Medicare-eligible individuals. There are different notices for creditable coverage and non-creditable coverage. The forms are also available in Spanish.
CMS Online Reporting Requirement for Employers
Employers providing prescription drug coverage to Medicare-eligible individuals must also submit an online disclosure to CMS annually, and upon any change that affects creditable status. The disclosure is due no later than 60 days from the beginning of a plan year, within 30 days after the termination of prescription drug coverage, or within 30 days after any change in creditable coverage status. This disclosure is required whether the employer-sponsored group coverage pays primary or secondary to Medicare coverage.
For help on calculating group size relating to “Medicare Primary” vs “Medicare Secondary,” COBRA, and the Affordable Care Act (ACA), refer to Word & Brown’s Group Count Reference (CA) or Group Count Reference (NV).
For additional support, contact WBCompliance via phone at 866.375.2039 or by email at ComplianceSupport@wordandbrown.com.
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