Many employers have a deadline coming up soon to complete their annual Medicare prescription drug disclosure with the federal Centers for Medicare and Medicaid Services (CMS). Businesses 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). The disclosure to CMS is due 60 days after the start of the plan year, so brokers should make sure to let all group health clients with calendar year plans (January 1 renewals) know that the deadline for submitting their disclosure to CMS is March 1st.
Each year, most employer plan sponsors have to 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. 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.
Each employer group needs to independently assess the creditability status of every plan option they offer that includes prescription drug benefits. There are a few ways a group plan sponsor can determine if their benefits cover, on average, as much as the standard Medicare Part D prescription drug plan. First, if the employer offers fully-insured coverage, then the insurance carrier should be able to verify if the drug benefit is creditable or not. An employer can also use the simplified determination guidance from CMS to assess the status of most prescription drug plan options. If the simplified determination doesn’t work for the group’s plan design, or the employer wishes to apply for the CMS Retiree Drug Subsidy Program, then an independent actuary should value the benefits.
There is no requirement that an employer offers Medicare creditable coverage, and there is no penalty to any group that doesn’t. The only things employer groups that offer prescription drug benefits to anyone who might be Medicare-eligible must do are: (1) tell federal government through the annual disclosure, and (2) send an accurate notice each year to all active employee plan participants and covered retirees that could be Medicare-eligible. So, if the employer plan’s prescription drug coverage doesn’t happen to be creditable, the business’s only obligation is to be honest in both their annual CMS disclosure and their notice to plan participants. For Medicare-eligible beneficiaries, if they learn their group plan isn’t creditable, then they can decide if they want to enroll in a higher-value Medicare Part D plan instead.
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 an employer group offers multiple prescription drug offerings, then the plan sponsor needs complete a disclosure for each plan option.
Once an employer has completed the drug coverage benefits testing for the year and submitted their form to CMS online, it is a good time for them to also update their 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 has to 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 employers to update the notice early on in the plan year, simultaneously with their CMS disclosure report. Fortunately, CMS makes notice creation easy, by providing templates and instructions.
Rob is an employee benefits expert with over 25 years of experience. He is the founder and principal of Precision Benefits Group, a leading provider of corporate benefits plans. He is a member of the Philadelphia Business Journal Leadership Trust and regularly contributes to the publication.