Each year, group health plan sponsors (employers) are required to disclose to individuals who are eligible for Medicare Part D (prescription drug) whether the health plan’s prescription drug coverage is creditable.
Plan sponsors must provide the annual disclosure notice to Medicare-eligible individuals before Oct. 15, 2021—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. Although there are no specific penalties associated with this notice requirement, failing to provide the notice may be detrimental to employees.
Who Should Receive the Notice?
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.
In general, an individual becomes entitled to Medicare Part A when he or she actually has Part A coverage, and not simply when he or she is first eligible. Medicare Part D-eligible individuals may include active employees, disabled employees, COBRA participants and retirees, as well as their covered spouses and dependents.
As a practical matter, we suggest providing the creditable coverage disclosure notices to all plan participants.
How Do I Disclose the Notice?
Employers have flexibility in how they must provide their creditable coverage disclosure notices.
The disclosure notices can be provided:
- If certain conditions are met, they can be provided with other plan participant materials, like annual open enrollment materials (particular rules apply)
- Electronically (particular rules apply)
Employer Action Items
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 Oct. 15, 2021.
Following are links to the model notices provided by CMS:
- A Model Creditable Coverage Disclosure Notice for when the health plan’s prescription drug coverage is creditable; and
- A Model Non-creditable Coverage Disclosure Notice for when the health plan’s prescription drug coverage is not creditable.
Reach out to your health insurance carrier, your Capital Group representative or to BenefisCompliance@capgroupfinanical.com to determine if the prescription drug coverage you offer is considered creditable or non-creditable.
*** If you use The Capital Group’s in-house Compliance Services your Medicare Part D Notice will be emailed to your company’s point of contact by September 20, 2021 ***