It seems as though the entire employee benefits/human resource universe has been transfixed on the upcoming, October 1 deadline for the ACA Marketplace Notice requirement (now deemed optional). In fact, this very blog site thoroughly addressed the Marketplace Notice requirement a mere two weeks ago, and provided guidance and compliance assistance! Meanwhile, another notice requirement, the 8th anniversary no less, looms...
OVERVIEW
The Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA) created a voluntary prescription drug program, called Medicare Part D, for Medicare eligible individuals. Medicare beneficiaries are eligible to elect supplemental coverage and receive (subsidized) prescription drug coverage through this program. Medicare beneficiaries who have other sources of drug coverage (e.g. employer group coverage) may decide to keep their current coverage and forgo enrollment in a Medicare Part D plan if the other plan is at least as good as the Medicare drug benefit. If the actuarial value of the employer-sponsored coverage is equal to or exceeds the actuarial value of the Medicare Part D prescription drug coverage, the employer-sponsored coverage is considered “creditable coverage.” Alternatively, if the actuarial value of the other plan's drug coverage is LESS than Part D, it is considered non-creditable, which may result in penalties to affected Medicare beneficiaries (penalty = 1% of eventual/elected Part D premium x the no. of months they had non-creditable coverage).
Under the Medicare Part D program, employer group health plans have a two-part compliance requirement.
No. 1: employers are required to provide a notice of creditable prescription drug coverage at least annually to those Medicare Part D eligible individuals who are covered by prescription drug coverage under the employer's group health plan. (Note: The notices vary depending on the creditability of coverage.) ;and
No. 2: The MMA also requires plan sponsors to make a disclosure to the Centers for Medicare & Medicaid Services (CMS) on an annual basis.
NOTE: If you are unsure of the creditable status of your plan option(s), contact your Broker/Consultant (for many of you, me) and request this information.
1. DISCLOSURE NOTICES
In order for Medicare Part D eligible individuals to make informed and timely enrollment decisions, group health plan sponsors must annually disclose the status (creditable or non-creditable) of the plan’s prescription drug coverage. If an individual’s enrollment in Part D is to be considered timely, the individual must enroll before the end of his or her Initial Enrollment Period.
The Initial Enrollment Period for Part D is concurrent with an individual’s Initial Enrollment Period for Medicare Part B. The Initial Enrollment Period is 7 months long, and includes the month in which an individual first meets the eligibility requirements for Parts A & B, and the 3 months before and after initial eligibility. After the Initial Enrollment Period, the individual may only subsequently enroll in a Part D plan during the Annual Coordinated Election Period from Oct. 15 through Dec. 7 of each year.
An eligible individual who fails to enroll in Medicare Part D during the Initial Enrollment Period must maintain “creditable coverage” or pay the late enrollment penalty(see above). The late enrollment penalty will be imposed after a break in creditable coverage that lasts for a period of 63 days or longer (after the Initial Enrollment Period) and will apply for as long as the individual remains enrolled in Part D. Thus, the Disclosure Notice is essential to an individual’s decision regarding whether to enroll in a Part D prescription drug plan.
TIMING OF NOTICES TO EMPLOYEES
At a minimum, Disclosure Notices must be provided at the following times:
· Prior to the Medicare Part D Annual Coordinated Election Period – Oct. 15 through Dec. 7;
· Prior to an individual’s Initial Enrollment Period for Part D;
· Prior to the effective date of coverage for any Medicare eligible individual that joins the plan;
· When prescription drug coverage ends or creditability status changes; and
· Upon a beneficiary’s request.
If the Disclosure Notice is provided to all plan participants annually, prior to the Annual Coordinated Election Period, CMS considers items 1 and 2 to be met. Further, “prior to” means that the individual must have been provided the Disclosure Notice within the past 12 months.
2. EMPLOYER DISCLOSURE TO CMS
Plan sponsors are also required to disclose to CMS whether their prescription drug coverage is creditable or non-creditable. The disclosure must be made to CMS on an annual basis, or upon any change that affects whether the coverage is creditable. At a minimum, the CMS Creditable Coverage Disclosure Notice must be provided at the following times:
· Within 60 days after the beginning date of the plan year for which the entity is providing the form;
· Within 30 days after the termination of the prescription drug plan; and
· Within 30 days after any change in the creditable coverage status of the prescription drug plan.
CMS has released guidance for making such disclosures (i.e., timing, format and model language). Plan sponsors are required to provide the disclosure notice to CMS through completion of the disclosure form on the CMS web page. You can access this guidance along with the reporting portal at - http://www.cms.gov/Medicare/Prescription-Drug-Coverage/CreditableCoverage/index.html?redirect=/CreditableCoverage/40_CCDisclosure.asp
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