- Posted by Jessica Waltman
- On September 18, 2017
Each year, the federal government requires employer health plans that include prescription drug benefits to send all potentially Medicare eligible drug plan participants a notice specifying if their group coverage is “creditable coverage.” Prescription drug benefits that are “creditable” are expected to cover, on average, as much as the standard Medicare Part D prescription drug plan. This year’s notice must be sent to plan participants before Sunday, October 15, 2017. The federal Centers for Medicare and Medicaid Services (CMS) has sample notices available for employers to use and information about how to determine if the coverage you offer is creditable online, and they also have published detailed guidance regarding distribution requirements.
The notice must be sent to affected plan participants each year before October 15th because that is the day that Medicare’s annual open enrollment window begins. Medicare-eligible people need to know about the extent of their drug coverage during this window so they can make an informed decision about whether or not to enroll in a Medicare Part D prescription drug plan. If a Medicare-eligible individual does not maintain continuous creditable coverage, then they can be subject to late enrollment penalties and higher premiums for life when they eventually do enroll in Medicare, so this notice is intended to prevent people from having to pay more for coverage unnecessarily.
Creditable coverage disclosure must be provided to Medicare eligible active working individuals and their dependents, Medicare eligible COBRA individuals and their dependents, Medicare eligible disabled individuals covered under your prescription drug plan and any retirees and their dependents. To ensure that every single potentially affected dependent and beneficiary gets a notice, many employers elect to provide the notice to all employees and COBRA beneficiaries. CMS allows companies to provide a single notice to both affected employees and their spouses and dependents. If an employer knows that a potentially Medicare-eligible spouse, dependent or COBRA beneficiary lives in a different location than their employee, then the company must send a separate direct notice to that individual.
The notices can be hand-delivered or mailed. They may be sent electronically only if electronic disclosure rules are applied. If the notice is included with other materials, then it must be prominently referenced within those materials in either a separate box or bolded or offset on the first page. It also must be printed in a minimum of 14-point font. When a company offers multiple benefit options, each plan with drug coverage must be separately tested to determine if it meets the credibility standard. However, a group can include information about all of its coverage options on a single notice document.