It’s that time again; time to send a Medicare Part D notice of creditable coverage to your eligible employees letting them know whether or not the prescription drug coverage you offer them is creditable. All employers, regardless of size, who sponsor group health plans with prescription drug coverage must provide notification by October 15 each year.
If you are receiving a BIM provided annual notice packet, the CMS employee notice is included in the packet. If you have distributed this notice after October 15, 2014 and to new hires going forward, you may be compliant with the employee notice requirement, unless your plan has changed since the last distribution. However, you will still need to disclose creditable coverage status to CMS using the online portal at CMS.gov.
Frequently Asked Questions
Q: What is creditable coverage?
A: This means the prescription drug coverage you offer is expected to pay, on average, as much as the standard Medicare prescription drug coverage.
Q: How do I determine whether my coverage is creditable?
A: You must annually review your prescription drug plan using generally accepted actuarial principles and by following Centers for Medicare and Medicaid Services (CMS) guidelines. Typically carriers will perform this analysis for fully insured plans.
Q: Is there a simplified way to determine creditable coverage status?
A: Yes, CMS states that an employer plan sponsor who does not apply for a retiree drug subsidy can determine creditable coverage status by determining that the plan:
- provides coverage for brand and generic prescriptions
- provides reasonable access to retail providers
- is designed to pay on average at least 60 percent of participants’ prescription drug expenses; and
- satisfies at least one of the following:
- For stand-alone prescription drug plans, either the prescription drug coverage has no annual benefit maximum or a maximum annual benefit payable by the plan of at least $25,000, or has an actuarial expectation that the amount payable by the plan will be at least $2,000 annually per Medicare-eligible individual; or
- For employers that have integrated prescription drug and health coverage, the integrated health plan has no more than a $250 deductible per year, has no annual benefit maximum or a maximum annual benefit of at least $25,000 and has no less than a $1 million lifetime combined benefit maximum.
Q: To whom must I provide a creditable coverage notice?
A: You must provide a creditable coverage notice to all Medicare-eligible individuals who are covered under, or apply for, your prescription drug plan. This requirement applies to active Medicare beneficiaries and those who are retired, as well as Medicare-eligible spouses who are covered as actives or retirees.
Q: Can you provide a sample of what I’m supposed to send to employees?
A: Yes, use one of the CMS notices and send to all your employees via mail or email. You can customize the sample notices with your company name/carrier/contact information. We suggest sending it to all employees, since you might not know whether a spouse is Medicare-eligible, and an individual’s status may change unexpectedly (e.g., due to disability).
Q: Is this the only time of year I must provide a creditable coverage notice?
A: No, you also must provide notice:
- before an individual’s initial opportunity to enroll in Part D (generally satisfied by the requirement to provide notice to all Medicare-eligible employees prior to October 15);
- before the effective date of coverage for any Medicare-eligible individual who joins your plan;
- when, if ever, your plan’s prescription drug coverage ends, or its creditable coverage status changes; and
- upon an individual’s request.
Q: Do I have any other prescription drug creditable coverage reporting obligations?
A: Yes, CMS requires you to disclose the creditable coverage status of your prescription drug plan using the online portal at CMS.gov. Please note you must report to CMS within 60 days after the beginning of your plan year and within 30 days after either your prescription drug plan terminates or changes its creditable coverage status.
For more information about prescription drug creditable coverage, visit CMS Creditable Coverage Info or ask BIM account team.