Employers who provide prescription drug coverage to those who are or may become eligible for Medicare Part D, must notify both plan members and CMS on whether the coverage provided is deemed “creditable” or “non-creditable” per the Medicare Modernization Act (MMA) of 2003. Creditable coverage means that the government considers the employer’s prescription drug coverage as good as or better than the Medicare drug benefit. Often, insurance carriers provide notices that outline whether your plan(s) are creditable or not. Many of the prescription copay plans are creditable, but often the High Deductible Health Plans (HDHP) are not. Determinations are subject to change each year.
Requirement 1 – Notifying Plan Members:
The first employer disclosure is to notify all Medicare eligible members (employees and/or dependents) of the group plan at least once per year by October 15th about the creditability status of their plan. This notice may be distributed throughout the year such as:
- When a Medicare eligible individual joins the plan
- Prior to an individual’s initial Part D enrollment period
- Upon request
Employers must also distribute this disclosure to the following (according to their enrollment):
- Active Medicare eligible employees and their dependents
- Medicare eligible COBRA members and their dependents
- Medicare eligible disabled individuals covered under your prescription drug plan
- Medicare eligible retirees and their dependents
*** Notice(s) must be distributed no later than October 15th ***
The government has provided model notices, listed below, which you can use to comply with the notification rules. Complete the details in brackets on the applicable Notice(s) prior to sending to eligible members.
For Creditable Coverage Notices: Model Individual Creditable Coverage Disclosure Notice
For Non-Creditable Notices: Model Individual Non-Creditable Coverage Disclosure Notice
Requirement 2 – Notifying CMS:
The second employer disclosure is to notify the Centers for Medicare and Medicaid Services (CMS) whether each group health plan is providing “creditable coverage” or “non-creditable coverage”.
This annual notification must be provided to CMS electronically within 60 days after the first day of the plan year, and within 30 days after termination of a prescription drug plan or a change of creditable status.
For more information about CMS/employer requirements please visit the Centers for Medicaid and Medicare Services.
Please call Business Benefits Insurance Solutions if you have any questions or need assistance determining the creditability status of your plans.