The annual Medicare Part D disclosure notices have a deadline of October 15, 2020.
Highlights of the Annual Medicare Part D Notices
- Medicare Part D imposes disclosure requirements on employers with group health plans that provide prescription drug coverage to Medicare-eligible individuals.
- Plan sponsors must provide the annual Medicare Part D creditable coverage disclosure notices to individuals before October 15, 2020.
- Model Disclosure Notices are available for employers to use.
- Employers must also complete a Centers for Medicare and Medicaid Services (CMS) online reporting form before October 15, 2020.
Each year, Medicare Part D requires group health plan sponsors to disclose to individuals who are eligible for Medicare Part D and to the Centers for Medicare and Medicaid Services (CMS) whether the health plan’s prescription drug coverage is creditable.
Plan sponsors must provide the annual disclosure notice to Medicare-eligible individuals before October 15, 2020 — the start date of the annual enrollment period for Medicare Part D.
This notice is important because Medicare beneficiaries who are not covered by creditable prescription drug coverage and do not enroll in Medicare Part D when first eligible will likely pay higher premiums if they enroll at a later date.
There are no specific penalties associated with this notice requirement. But, failing to provide the notice may be detrimental to employees.
Action Steps for Medicare Part D Notices
Employers should confirm whether their health plans’ prescription drug coverage is creditable or non-creditable and prepare to send their Medicare Part D disclosure notices before October 15, 2020. To make the process easier, employers often include Medicare Part D notices in open enrollment packets they send out prior to October 15.
In general, this actuarial determination measures whether the expected amount of paid claims under the group health plan’s prescription drug coverage is at least as much as the expected amount of paid claims under the Medicare Part D prescription drug benefit. For plans that have multiple benefit options (for example, PPO, HDHP, and HMO), the creditable coverage test must be applied separately for each benefit option.
A group health plan’s prescription drug coverage is considered creditable if its actuarial value equals or exceeds the actuarial value of standard Medicare Part D prescription drug coverage.
The creditable coverage disclosure notice must be provided to Medicare Part D-eligible individuals who are covered by, or who apply for, the health plan’s prescription drug coverage. An individual is eligible for Medicare Part D if he or she:
- Is entitled to Medicare Part A or is enrolled in Medicare Part B; and
- Lives in the service area of a Medicare Part D plan.
Timing of Medicare Part D Notices
At a minimum, disclosure notices must be provided at the following times:
- Before the Medicare Part D Annual coordinated election period — beginning October 15 through December 7 of each year
- Prior to an individual’s initial enrollment period for Medicare Part D
- Prior to the effective date of coverage for any Medicare-eligible individual who joins the plan
- Whenever prescription drug coverage ends or changes so that it is no longer creditable or becomes creditable
- Upon a beneficiary’s request.
If the creditable coverage disclosure notice is provided to all plan participants annually before October 15 of each year, items 1 and 2 above will be satisfied. “Prior to,” as used above, means the individual must have been provided with the notice within the past 12 months. In addition to providing the notice each year before October 15, plan sponsors should consider including the notice in plan enrollment materials for new hires.
Method of Delivering Medicare Part D Notices
Plan sponsors have flexibility in how they must provide their creditable coverage disclosure notices. The disclosure notices can be provided separately. Or, if certain conditions are met, they can be provided with other plan participant materials, like annual open enrollment materials. The notices can also be sent electronically in some instances.
As a general rule, a single disclosure notice may be provided to the covered Medicare beneficiary and all of his or her Medicare Part D-eligible dependents covered under the same plan.
However, if it is known that any spouse or dependent who is eligible for Medicare Part D lives at a different address than where the participant materials were mailed, a separate notice must be provided to the Medicare-eligible spouse or dependent residing at a different address.
Disclosure to Centers of Medicare and Medicaid Services (CMS)
Entities that are required to provide a disclosure of creditable coverage status to the Centers of Medicare and Medicaid Services (CMS) must complete an online Disclosure to CMS Form by October 15, 2020.
Please do not hesitate to reach out to the Group Benefits team at Mason-McBride. We’re here to further discuss your particular situation if you have additional questions. Information sources: https://www.thehortongroup.com; https://www.keystoneinsgrp.com; https://www.cms.gov
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