Don’t Let Your Medicare Part D Creditable Coverage Notices Get Lost in the Shuffle

Insights | Don’t Let Your Medicare Part D Creditable Coverage Notices Get Lost in the Shuffle

Author: Shelly Hodges-Konys, Director of Compliance
It’s that time of year again! Fall is quickly approaching which means many employers with calendar year plans are making benefits decisions and planning open enrollment. Decisions seem a little more complicated this year with new considerations like vaccination surcharges which we mentioned earlier in the week. So, it would not be a surprise if some of the more routine parts of benefits compliance get lost in the shuffle. HORAN is here to help remind you that the deadline to provide Medicare Part D notices is also approaching.  Following is what employer plan sponsors need to know to comply. 

Each year employers must disclose whether the prescription drug coverage they offer is creditable or non-creditable to Medicare eligible participants before the Medicare annual enrollment period begins on October 15. “Creditable” means on average that the value of the coverage is expected to be equal to or greater than Medicare’s standard prescription drug coverage. This information is important because if individuals fail to enroll in Part D or other creditable coverage when first eligible, they may have to pay higher premiums on a permanent basis when they do enroll in Part D coverage. 
Employers are required to provide a Medicare Part D Creditable Coverage notice:

  • Before an individual’s initial Medicare enrollment period;
  • Before the effective date of coverage for Medicare eligible individuals that enroll in the employer’s prescription drug coverage;
  • Whenever any change occurs affecting the “creditable” status of the coverage or the employer ceases to provide prescription drug coverage; and
  • Upon request.

From a practical standpoint, employers don’t always know which individuals are “Medicare eligible.” For this reason, “best practice” is to provide the annual notice to all individuals enrolled or seeking to enroll in the employers’ plans prior to the beginning of the Medicare annual enrollment period beginning on October 15 to ensure compliance. An employer is considered to have met the requirement to provide a notice before an individual’s initial enrollment period if they provide the notice to all eligible participants at least once per year (This is another reason providing the notice to all employees prior to the Medicare annual enrollment period is a good idea.).

Employers are required to disclose the creditable status for the plan currently in place. This can create confusion for employers who are also holding their plan’s annual enrollment period if the prescription drug plan’s creditable status is changing from creditable to non-creditable or vice versa. While a literal interpretation would require the employer to send a notice both prior to the Medicare open enrollment period and again if the creditable status of the plan changes, it is likely that providing a single combined notice would suffice. If providing a combined Medicare Part D Notice, the notice should include i) the status of the current plan in place; ii) how the plan is changing; and iii) the effective date of the change. 
In addition to notifying individuals, employers must report the creditable status of their drug coverage each year to CMS:

  • No later than 60 days after the start of the plan year;
  • Within 30 days of termination of the prescription drug plan; and
  • Within 30 days of a change impacting the creditable status of the plan.

Disclosure of a plan’s status to CMS can be completed here.

For questions or additional information, please contact your HORAN account representative at 800.544.8306.

The information contained in this document is informational only and is not intended as, nor should it be construed as, legal or accounting advice. Neither HORAN nor its consultants provide legal, tax nor accounting advice of any kind. We make no legal representation, nor do we take legal responsibility of any kind regarding regulatory compliance. Please consult your counsel for a definitive interpretation of current statute and regulation and their impact on you and your organization.