- On February 15, 2018
Did you know that all employer plan sponsors that offer prescription drug coverage to Medicare Part D-eligible beneficiaries (including active employees, dependents, and retirees) as part of their benefit plan offerings need to provide annual disclosures to both those plan participants and the federal Centers for Medicare and Medicaid Services (CMS)? For calendar year plans (January 1 renewals), the deadline for submitting their 2018 disclosure to CMS is March 1st, so you might need to act soon! If you aren’t sure if you need to comply or if you need help with this process, please contact your Kistler Tiffany Benefits’ Employee Benefits Consultant.
Each year, most employer plan sponsors must tell beneficiaries and the federal government if the drug benefits they offer are “creditable,” meaning that the group coverage covers as much, in average terms, as the standard Medicare Part D prescription drug plan. These rules apply to any employer that may offer prescription drug coverage to any Medicare Part D-eligible individual. Notices need to be distributed each year before the Medicare annual election period begins on October 15th, but employer plans also need to submit an online disclosure form to CMS no later than 60 days after the start of the group plan year.
The procedure for notifying CMS about a plan’s creditable coverage status is quick and painless—it just needs to be done on time. To complete the disclosure, the plan sponsor should access the online form, and enter the plan’s contact information and the employer’s federal tax identification number. Then the plan sponsor needs to attest if all or some of the plan’s prescription drug offerings are creditable or not and submit the form. If your company offers multiple prescription drug offerings, then the plan sponsor needs to test each benefit option to make sure it covers as much as the average Part D plan.
Fortunately, the test to determine if prescription drug benefits are creditable is relatively simple. Unless your company is applying for a retiree drug subsidy from CMS, a group can affirm that their drug coverage is creditable if their plan design meets all four of the following standards.
- Provides coverage for brand and generic prescriptions;
- Provides reasonable access to retail providers;
- The plan is designed to pay on average at least 60% of participants’ prescription drug expenses; and
- The plan satisfies one of the following criteria (drug plans that are integrated with a medical plan must satisfy 4(c)):
- The prescription drug coverage has no annual benefit maximum benefit or a maximum annual benefit payable by the plan of at least $25,000, or
- The prescription drug coverage has an actuarial expectation that the amount payable by the plan will be at least $2,000 annually per Medicare eligible individual.
- For entities that have integrated 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 payable by the plan of at least $25,000 and has no less than a $1,000,000 lifetime combined benefit maximum.
Once you’ve completed your plan’s drug coverage benefits testing for the year and submitted their form to CMS online, it is also a good time to take an additional 15-30 minutes and update your Medicare Part D Creditable Coverage Notice for plan beneficiaries. This notice must be distributed to Medicare-eligible plan participants before October 15th each year, so most groups give it out to all employees in the Fall. However, it also must be distributed to any Medicare-eligible individual that joins the employer plan mid-year before their effective date of coverage, or upon the request of any beneficiary. So it makes sense for you to update the notice simultaneously with their CMS disclosure report. Fortunately, CMS makes notice creation easy, by providing templates and instructions.
If you have questions regarding the above disclosure requirements, please do not hesitate to contact your Kistler Tiffany Benefits’ Consultant.