Are you an employ­er that offers or pro­vides group health cov­er­age to your work­ers? Does your health plan cov­er out­pa­tient pre­scrip­tion drugs — either as a med­ical claim or through a card sys­tem? If so, be sure to dis­trib­ute your plan’s Medicare Part D notice before Octo­ber 15.

Purpose

Medicare began offer­ing “Part D” plans — option­al pre­scrip­tion drug ben­e­fit plans sold by pri­vate insur­ance com­pa­nies and HMOs — to Medicare ben­e­fi­cia­ries many years ago. Peo­ple may enroll in a Part D plan when they first become eli­gi­ble for Medicare.

If they wait too long, a late enroll­ment penal­ty amount is per­ma­nent­ly added to the Part D plan pre­mi­um cost when they do enroll. There is an excep­tion, though, for indi­vid­u­als who are cov­ered under an employer’s group health plan that pro­vides cred­itable cov­er­age. (“Cred­itable” means that the group plan’s drug ben­e­fits are actu­ar­i­al­ly equiv­a­lent or bet­ter than the ben­e­fits required in a Part D plan.) In that case, the indi­vid­ual can delay enrolling for a Part D plan while he or she remains cov­ered under the employer’s cred­itable plan. Medicare will waive the late enroll­ment pre­mi­um penal­ty for indi­vid­u­als who enroll in a Part D plan after their ini­tial eli­gi­bil­i­ty date if they were cov­ered by an employer’s cred­itable plan. To avoid the late enroll­ment penal­ty, there can­not be a gap longer than 62 days between the cred­itable group plan and the Part D plan.

To help Medicare-eli­gi­ble plan par­tic­i­pants make informed deci­sions about whether and when to enroll in a Part D drug plan, they need to know if their employer’s group health plan pro­vides cred­itable or non­cred­itable pre­scrip­tion drug cov­er­age. That is the pur­pose of the fed­er­al require­ment for employ­ers to pro­vide an annu­al notice (Employer’s Medicare Part D Notice) to all Medicare-eli­gi­ble employ­ees and spouses.

Employer Requirements

Fed­er­al law requires all employ­ers that offer group health cov­er­age includ­ing any out­pa­tient pre­scrip­tion drug ben­e­fits to pro­vide an annu­al notice to plan participants.

The notice require­ment applies regard­less of the employer’s size or whether the group plan is insured or self-funded:

  • Deter­mine whether your group health plan’s pre­scrip­tion drug cov­er­age is cred­itable or non­cred­itable for the upcom­ing year (2022). If your plan is insured, the carrier/HMO will con­firm cred­itable or non­cred­itable sta­tus. Keep a copy of the writ­ten con­fir­ma­tion for your records. For self-fund­ed plans, the plan actu­ary will deter­mine the plan’s sta­tus using guid­ance pro­vid­ed by the Cen­ters for Medicare and Med­ic­aid Ser­vices (CMS).
  • Dis­trib­ute a Notice of Cred­itable Cov­er­age or a Notice of Non­cred­itable Cov­er­age, as applic­a­ble, to all group health plan par­tic­i­pants who are or may become eli­gi­ble for Medicare in the next year. “Par­tic­i­pants” include cov­ered employ­ees and retirees (and spous­es) and COBRA enrollees. Employ­ers often do not know whether a par­tic­u­lar par­tic­i­pant may be eli­gi­ble for Medicare due to age or dis­abil­i­ty. For con­ve­nience, many employ­ers decide to dis­trib­ute their notice to all par­tic­i­pants regard­less of Medicare status.
  • Notices must be dis­trib­uted at least annu­al­ly before Octo­ber 15. Medicare holds its Part D enroll­ment peri­od each year from Octo­ber 15 to Decem­ber 7, which is why it is impor­tant for group health plan par­tic­i­pants to receive their employer’s notice before Octo­ber 15.
  • Notices also may be required after Octo­ber 15 for new enrollees and/or if the plan’s cred­itable ver­sus non­cred­itable sta­tus changes.

Prepar­ing the Notice(s)

Mod­el notices are avail­able on the CMS web­site. Start with the mod­el notice and then fill in the blanks and vari­able items as need­ed for each group health plan. There are two ver­sions: Notice of Cred­itable Cov­er­age or Notice of Non­cred­itable Cov­er­age and each is avail­able in Eng­lish and Spanish:

Employ­ers who offer mul­ti­ple group health plan options, such as PPOs, HDH­Ps, and HMOs, may use one notice if all options are cred­itable (or all are non­cred­itable). In this case, it is advis­able to list the names of the var­i­ous plan options so it is clear for the read­er. Con­verse­ly, employ­ers that offer a cred­itable plan and a non­cred­itable plan, such as a cred­itable HMO and a non­cred­itable HDHP, will need to pre­pare sep­a­rate notices for the dif­fer­ent plan participants.

Dis­trib­ut­ing the Notice(s)

You may dis­trib­ute the notice by first-class mail to the employee’s home or work address. A sep­a­rate notice for the employee’s spouse or fam­i­ly mem­bers is not required unless the employ­er has infor­ma­tion that they live at dif­fer­ent addresses.

The notice is intend­ed to be a stand-alone doc­u­ment. It may be dis­trib­uted at the same time as oth­er plan mate­ri­als, but it should be a sep­a­rate doc­u­ment. If the notice is incor­po­rat­ed with oth­er mate­r­i­al (such as sta­pled items or in a book­let for­mat), the notice must appear in 14-point font, be bold­ed, off­set, or boxed, and placed on the first page. Alter­na­tive­ly, in this case, you can put a ref­er­ence (in 14-point font, either bold­ed, off­set, or boxed) on the first page telling the read­er where to find the notice with­in the mate­r­i­al. Here is sug­gest­ed text from the CMS for the first page:

“If you (and/or your depen­dents) have Medicare or will become eli­gi­ble for Medicare in the next 12 months, a fed­er­al law gives you more choic­es about your pre­scrip­tion drug cov­er­age. Please see page XX for more details.”

Email dis­tri­b­u­tion is allowed but only for employ­ees who have reg­u­lar access to email as an inte­gral part of their job duties. Employ­ees also must have access to a print­er, be noti­fied that a hard copy of the notice is avail­able at no cost upon request, and be informed that they are respon­si­ble for shar­ing the notice with any Medicare-eli­gi­ble fam­i­ly mem­bers who are enrolled in the employer’s group plan.

CMS Dis­clo­sure Requirement

Sep­a­rate from the par­tic­i­pant notice require­ment, employ­ers also must dis­close to the CMS whether their group health plan pro­vides cred­itable or non­cred­itable cov­er­age. To sub­mit your plan’s dis­clo­sure, use the CMS online tool and fol­low the prompts. The process usu­al­ly takes only 5 or 10 min­utes to com­plete. It is due with 60 days after the start of the plan year; for instance, for cal­en­dar year plans that will be March 1, 2022. If the plan’s pre­scrip­tion drug cov­er­age ends or its sta­tus as cred­itable or non­cred­itable changes, sub­mit a new dis­clo­sure with­in 30 days of the change.

By Kath­leen A. Berger

Orig­i­nal­ly post­ed on Min­er­al