September 14, 2020
This is a friendly reminder that the deadline to provide notices of creditable or non-creditable coverage to Medicare eligible beneficiaries for prescription drug coverage (“Medicare Part D Notice”) is fast approaching. The Medicare Part D Notice must be distributed no later than October 14, 2020, prior to the annual election period that will take place from October 15 – December 7 this year.
The Medicare Part D Notice alerts individuals as to whether or not their plan’s prescription drug coverage is at least as good as the Medicare Part D coverage. Medicare beneficiaries who are not covered by creditable prescription drug coverage and who choose not to enroll in Medicare Part D before the end of their initial enrollment period, and enroll at a later date, will likely pay higher premiums.
The Medicare Part D Notice must be provided to all Medicare Part D eligible individuals who are covered under, or who apply for, prescription drug coverage, through an employer plan providing such 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.
At a minimum, the Medicare Part D Notice must be provided at the following times:
If the Medicare Part D 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. For clients of Burnham, the Medicare Part D Notice is included within the Annual Notice packets. As long as the Annual Notice packets are provided to participants at least annually, the Medicare Part D Notice distribution requirement will be satisfied.
In addition to providing the notice each year before October 15, plan sponsors should consider including the Notice in plan enrollment materials provided to new hires.
Plan sponsors have flexibility in how they must provide the Medicare Part D Notice. The disclosure notices can be provided separately, or if certain conditions are met, they can be provided with other plan participant materials (e.g., annual open enrollment materials. The Medicare Part D Notice can also be sent electronically in some instances.
If a plan sponsor chooses to provide the Medicare Part D Notice with other plan participant information, the creditable coverage disclosure must be prominent and conspicuous. This means that the Medicare Part D Notice portion of the document, or a reference to the section in the document that contains the Medicare Part D Notice, must be prominently referenced in at least 14-point font in a separate box, bolded or offset on the first page of the provided plan participant information.
As a general rule, a single Medicare Part D 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.
The Medicare Part D Notice may be sent electronically under certain circumstances. The Centers for Medicare & Medicaid Services (CMS) has issued guidance that indicates that health plan sponsors may use the electronic disclosure standards under Department of Labor (DOL) regulations in order to send the Medicare Part D Notice electronically.
According to CMS, these regulations allow a plan sponsor to provide the Medicare Part D Notice electronically to plan participants who have the ability to access electronic documents at their regular place of work, if they have access to the sponsor's electronic information system on a daily basis as part of their work duties. The DOL’s regulations for electronic delivery require that:
Also, if a plan sponsor uses electronic delivery, the sponsor must inform the plan participant that the participant is responsible for providing a copy of the electronic disclosure to their Medicare-eligible dependents covered under the group health plan. In addition, the guidance from CMS indicates that a plan sponsor may provide a Medicare Part D Notice electronically if the Medicare-eligible individual has indicated to the sponsor that he or she has adequate access to electronic information. According to CMS, before individuals agree to receive their information via electronic means, they must be informed of their right to obtain a paper version, how to withdraw their consent and update address information, and any hardware or software requirement to access and retain the Medicare Part D Notice.
If the individual consents to an electronic transfer of the Notice, a valid email address must be provided to the plan sponsor and the consent from the individual must be submitted electronically to the plan sponsor. According to CMS, this ensures the individual’s ability to access the information as well as ensures that the system for furnishing these documents results in actual receipt. In addition to having the Medicare Part D Notice sent to the individual’s email address, the Medicare Part D Notice (except for personalized notices) must be posted on the plan sponsor’s website, if applicable, with a link on the sponsor’s home page to the Notice.
Plan sponsors are also required to disclose to CMS whether their prescription drug coverage is 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:
Plan sponsors are required to provide the disclosure notice to CMS through completion of the disclosure form on the CMS Creditable Coverage Disclosure webpage. This is the sole method for compliance with the CMS disclosure requirement, unless a specific exception applies.
For additional information, please contact your Burnham Benefits Consultant or Burnham Benefits at 949-833-2983 or firstname.lastname@example.org.
Burnham Benefits does not engage in the practice of law and this publication should not be construed as the providing of legal advice or a legal opinion of any kind. The consulting advice we provide is intended solely to assist in assessing its compliance with the Patient Protection and Affordable Care Act and other applicable federal and state law requirements, and is based on Burnham Benefit’s interpretation of federal guidance in effect as of the date of this publication. To the best of our knowledge, the information provided herein, and assumptions relied on, are reasonable and accurate as of the date of this publication. Furthermore, to ensure compliance with IRS Circular 230, any tax advice contained in this publication is not intended to be used, and cannot be used, for purposes of (i) avoiding penalties imposed under the United States Internal Revenue Code or (ii) promoting, marketing or recommending to another person any tax-related matter.