Home » Business Division » Employee Benefits » News and Events
News and Events
Medicare Part D Notices Are Due by Oct. 14, 2017 - September 2017
Each year, Medicare Part D requires group health plan
sponsors to disclose to individuals who are eligible for Medicare Part D and to
the Centers for Medicare and Medicaid Services (CMS) whether the health plan’s
prescription drug coverage is creditable. Plan sponsors must provide the annual
disclosure notice to Medicare-eligible individuals before Oct. 15, 2017—the
start date of the annual enrollment period for Medicare Part D. CMS has
provided model disclosure notices for employers to use.
This notice is important because Medicare beneficiaries who
are not covered by creditable prescription drug coverage and who choose not to
enroll in Medicare Part D when first eligible will likely pay higher premiums
if they enroll at a later date. Thus, although there are no specific penalties
associated with this notice requirement, failing to provide the notice may
trigger adverse employee relations issues.
Employers should confirm whether their health plans’
prescription drug coverage is creditable or non-creditable and prepare to send their
Medicare Part D disclosure notices by Oct. 14, 2017. To make the process
easier, employers who send out open enrollment packets prior to Oct. 15 often
include the Medicare Part D notices in these packets.
A group health plan’s prescription drug coverage is
considered creditable if its actuarial value equals or exceeds the actuarial
value of standard Medicare Part D prescription drug coverage. In general, this
actuarial determination measures whether the expected amount of paid claims
under the group health plan’s prescription drug coverage is at least as much as
the expected amount of paid claims under the Medicare Part D prescription drug
benefit. For plans that have multiple benefit options (for example, PPO, HDHP
and HMO), the creditable coverage test must be applied separately for each benefit
CMS has provided two model notices for employers to use:
Creditable Coverage Disclosure Notice for when the health plan’s
prescription drug coverage is creditable; and
A Model Non-creditable Coverage Disclosure Notice for when
the health plan’s prescription drug coverage is not creditable.
These model notices are also available in Spanish on CMS’
Employers are not required to use the model notices from
CMS. However, if the model language is not used, a plan sponsor’s notices must
include certain information, including a disclosure about whether the plan’s
coverage is creditable and explanations of the meaning of creditable coverage
and why creditable coverage is important.
The creditable coverage disclosure notice must be provided
to Medicare Part D-eligible individuals who are covered by, or who apply for,
the health plan’s prescription drug coverage. An individual is eligible for
Medicare Part D if he or she:
- Is entitled to Medicare Part A or is enrolled in
Medicare Part B; and
- Lives in the service area of a Medicare Part D
In general, an individual becomes entitled to Medicare Part
A when he or she actually has Part A coverage, and not simply when he or she is
first eligible. Medicare Part D-eligible individuals may include active
employees, disabled employees, COBRA participants and retirees, as well as
their covered spouses and dependents.
As a practical matter, group health plan sponsors often
provide the creditable coverage disclosure notices to all plan participants.
Timing of Notices
At a minimum, creditable coverage disclosure notices must be
provided at the following times:
- Prior to the Medicare Part D annual coordinated
election period—beginning Oct. 15 through Dec. 7 of each year
- Prior to an individual’s initial enrollment
period for Medicare Part D
- Prior to the effective date of coverage for any
Medicare-eligible individual who joins the plan
- Whenever prescription drug coverage ends or
changes so that it is no longer creditable or becomes creditable
- Upon a beneficiary’s request
If the creditable coverage disclosure notice is provided to
all plan participants annually before Oct. 15 of each year, items (1) and (2)
above will be satisfied. “Prior to,” as used above, means the individual must
have been provided with the notice within the past 12 months. In addition to
providing the notice each year before Oct. 15, plan sponsors should consider
including the notice in plan enrollment materials provided to new hires.
Method of Delivering
Plan sponsors have flexibility in how they must provide their
creditable coverage disclosure notices. The disclosure notices can be provided
separately, or if certain conditions are met, they can be provided with other
plan participant materials, like annual open enrollment materials. The notices
can also be sent electronically in some instances.
As a general rule, a single disclosure notice may be
provided to the covered Medicare beneficiary and all of his or her Medicare
Part Deligible dependents covered under the same plan. However, if it is known
that any spouse or dependent who is eligible for Medicare Part D lives at a
different address than where the participant materials were mailed, a separate
notice must be provided to the Medicare-eligible spouse or dependent residing
at a different address.
Creditable coverage disclosure notices may be sent
electronically under certain circumstances. CMS has issued guidance indicating
that health plan sponsors may use the electronic disclosure standards under
Department of Labor (DOL) regulations in order to send the creditable coverage
disclosure notices electronically. According to CMS, these regulations allow a
plan sponsor to provide a creditable coverage disclosure notice electronically
to plan participants who have the ability to access electronic documents at
their regular place of work, if they have access to the sponsor's electronic
information system on a daily basis as part of their work duties.
The DOL’s regulations for electronic delivery require that:
- The plan administrator use appropriate and reasonable means
to ensure that the system for furnishing documents results in actual receipt of
- Notice is provided to each recipient, at the time the electronic
document is furnished, of the significance of the document; and
- A paper version of the document is available on request.
Also, if a plan sponsor uses electronic delivery, the
sponsor must inform the plan participant that the participant is responsible
for providing a copy of the electronic disclosure to their Medicare-eligible
dependents covered under the group health plan.
In addition, the guidance from CMS indicates that a plan
sponsor may provide a disclosure notice electronically to retirees if the
Medicare-eligible individual has indicated to the sponsor that he or she has
adequate access to electronic information. According to CMS, before individuals
agree to receive their information via electronic means, they must be informed
of their right to obtain a paper version, how to withdraw their consent and update
address information, and any hardware or software requirements to access and
retain the creditable coverage disclosure notice.
If the individual consents to an electronic transfer of the
notice, a valid email address must be provided to the plan sponsor and the
consent from the individual must be submitted electronically to the plan
sponsor. According to CMS, this ensures the individual’s ability to access the
information as well as ensures that the system for furnishing these documents
results in actual receipt. In addition to having the disclosure notice sent to
the individual’s email address, the notice (except for personalized notices)
must be posted on the plan sponsor’s website, if applicable, with a link on the
sponsor’s home page to the disclosure notice.
Disclosure to CMS
Plan sponsors are also required to disclose to CMS whether
their prescription drug coverage is creditable. The disclosure must be made to
CMS on an annual basis, or upon any change that affects whether the coverage is
creditable. At a minimum, the CMS creditable coverage disclosure notice must be
provided at the following times:
- Within 60 days after the beginning date of the
plan year for which the entity is providing the form;
- Within 30 days after the termination of the
prescription drug plan; and
- Within 30 days after any change in the
creditable coverage status of the prescription drug plan.
Plan sponsors are required to provide the disclosure notice
to CMS through completion of the disclosure form on the CMS Creditable Coverage
Disclosure webpage. This is the sole method for compliance with the CMS
disclosure requirement, unless a specific exception applies.