Medicare Part D Advisory: Sponsors of Prescription Drug Plans Must Provide Notices Prior to October 15 Each Year

Who must comply: Employers that sponsor a group health plan that covers prescription drugs, regardless of employer size.

Deadline to comply: Prior to October 15 of each year.

What must employers do? Customize the Notice of Creditable (or Non-Creditable) Coverage and distribute to Medicare-eligible plan participants.

The model notices can be customized for your employees.

  • Employers typically do not know if a dependent is eligible for Medicare due to disability or end-stage renal disease; therefore, Bolton recommends providing the notice to all eligible employees.
  • An employer is only required to provide one Notice of Creditable Coverage per household even if more than one member of the household is covered by the group health plan and eligible for Medicare.
  • Delivery Methods: Electronic distribution may be permissible as outlined in more detail below. If electronic delivery is not an option, employers may also distribute via the following methods: hand delivery, mail, and it can be distributed with the Summary Plan Description (SPD) or other enrollment materials as long as its significance is sufficiently conveyed to recipients.

More Information:

Sponsors of group health plans that cover prescription drugs must provide Medicare Part D creditable (or non-creditable) coverage notices prior to October 15, the start date of the Medicare annual enrollment period for Part D, Prescription Drug coverage. The enrollment period is October 15 to December 7.

The October 15 deadline applies for all group health plan sponsors that offer prescription drug benefits, regardless of plan year, plan size, employer size, grandfather status, or whether the plan is insured or self-funded.

The purpose of the disclosure is to inform Medicare beneficiaries of whether the employer’s drug coverage is expected to provide coverage comparable to the Medicare Part D prescription drug coverage.

Medicare-eligible employees should keep the creditable coverage notice for future reference. If a Medicare-eligible employee or dependent becomes eligible for Part D and decides not to enroll because he or she has employer-sponsored coverage, a creditable coverage notice allows them to enroll in Part D later without being charged a higher premium.

For individuals enrolled in a non-creditable drug plan, failure to enroll in Part D when first eligible will result in higher premium if they enroll in Part D later.

The Notice of Creditable (or Non-Creditable) Coverage must be distributed to all individuals enrolled in an employer’s group health plan that fall within one of the following categories:

  • Active employees or COBRA participants over age 65 eligible for Medicare (Part A and/or B)
  • Spouses of active employees over age 65 eligible for Medicare (Part A and/or B)
  • Dependent children of active employees eligible for Medicare (Part A and/or B) regardless of age
  • Retirees over age 65 eligible for Medicare (Part A and/or B)
  • Spouses of active employees and/or retirees eligible for Medicare (Part A and/or B)
  • Dependent children of a retiree eligible for Medicare (Part A and/or B) regardless of age

Electronic Distribution:

Employers can distribute these notices electronically to participants who have the ability to access electronic documents at their regular place of work as long as those participants have access to the electronic information system on a daily basis as part of their work duties. Employers can distribute electronically under these circumstances without the participant’s consent. Participants must be informed, however, that they are responsible for providing a copy of the electronic notice to their Medicare-eligible dependents covered under the group health plan.

Employers are also required to notify CMS online annually that they have sent out these Part D notices. The notice to CMS is due within 60 days after the start of the employer’s plan year.

More information regarding creditable coverage can be found here.

About Michelle Cammayo, Compliance National Practice Leader, Employee Benefits

Michelle Cammayo has close to 20 years of Employee Benefits experience specializing in all lines of health and welfare benefits. Today, Michelle works closely with clients and partners to provide guidance in areas of the law including ERISA, HIPAA, COBRA, FMLA and PPACA. She is also the IMA National Practice Leader for Compliance and endeavors to ensure IMA helps its clients manage and eliminate risk in the most effective manner. She is passionate about educating others and her passion for this shined in the COVID era where Michelle conducted weekly and then monthly webinars providing guidance to employers. Her podcast, Cammayo’s Compliance Talk, has gained popularity in the last three years to become a favorite amongst our clients. She also contributes regularly to our Blog and has authored several articles for industry-related newsletters. Michelle’s consultative approach with employers provides practical advice as employers endeavor to be compliant.

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