Medicare Part D Compliance

Employers are required to advise (1) the Centers for Medicare and Medicaid Services (CMS) and (2) their Medicare eligible employees (active and retired) whether or not their employer-sponsored prescription drug coverage is considered "creditable." Members must received receive notification no later than October 14 for the October 15 - December 7 Medicare enrollment period and the employer must complete the CMS online disclosure no later than 60 days following the first day of their plan year.*

CMS Reporting

Employers sponsoring group health plans that include prescription drug coverage are required to provide an annual online disclosure to the Centers for Medicare & Medicaid Services (CMS) to report the creditable coverage status of their prescription drug plans. The disclosure form is due no later than 60 days after the beginning of a plan year—for calendar year plans beginning on January 1, 2017, this date would be February 28, 2017.Employers must also disclose to CMS if their prescription drug coverage is creditable.

Prescription coverage is defined as "creditable" when its actuarial value equals or exceeds the standard Part D prescription drug benefit. If the coverage does not equal or exceed the value of the standard Part D benefit, it is considered as "non-creditable".

Why Is Creditable Coverage Important?

If a Medicare eligible's drug benefit is considered creditable, then the individual may continue to receive the same drug coverage and is not required to sign up for individual Part D coverage. The creditable coverage notice allows them to avoid a higher premium if they sign up for Part D coverage at a later date instead of when the originally become eligible. If the current drug coverage is not creditable and the Medicare eligible delays enrollment in Medicare Part D, they will likely pay a higher premium.

Who Receives a Notice?

Employers are required to send creditable coverage notices to all Medicare eligible individuals when the employer chooses the subsidy option. For employers choosing Enhanced Part D benefits for Medicare eligible retirees, all Medicare-eligible individuals who are active employees must receive the notice. CMS recommends that employers provide this notice to all participants in their Open Enrollment materials so as to ensure that all impacted Medicare eligibles receive the notice.

CMS Reporting

Employers must also disclose to CMS if their prescription drug coverage is creditable.

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