Medicare Creditable Coverage Part D Notification Requirements
Creditable coverage is prescription drug coverage that meets certain standards set by CMS. Medicare beneficiaries without creditable coverage may pay a higher premium for Medicare Part D prescription drug coverage.
What Are The Notification Requirements?
Each year, plans that offer prescription drug coverage to their Medicare-eligible members must notify them by October 15 as to whether that coverage is creditable or non-creditable. Customers must then disclose this information to their Medicare-eligible members and notify CMS.
Why Is This Important?
Medicare beneficiaries without creditable coverage may pay a higher premium permanently for Medicare Part D prescription drug coverage if they subsequently enroll.
What Should I Do If I Am Not Sure Whether My Prescription Drug Coverage Is Creditable?
Contact your plan administrator or your insurance company.
What is MLR and How to Handle Rebates
For more information read the Guide to Medical Loss Ratio (MLR) Rebates written by Rob DeNinno on our site and download our Compliance Inisghts PDF on Medical Loss Ratios.
IRS Announces 2024 ACA Affordability Indexed Amount
The IRS has announced that the ACA affordability indexed amount for 2024 will be 8.39%. This means that employers can avoid penalties by offering health insurance that costs less than 8.39% of an employee’s W-2 wages, rate of pay, or the Federal Poverty Level.
What Should Employers Do?
Employers should review their employee contribution amounts for 2024 to make sure that they meet one of these safe harbors.
Here are the three safe harbors:
- W-2 safe harbor: The employee’s monthly contribution for self-only coverage cannot exceed 8.39% of their W-2 wages.
- Rate of pay safe harbor: The employee’s monthly contribution for self-only coverage cannot exceed 8.39% of their monthly wages.
- Federal Poverty Level (FPL) safe harbor: The employee’s monthly contribution for self-only coverage cannot exceed 8.39% of the FPL.
- Employers who meet one of these safe harbors will not be subject to a penalty for not offering affordable health insurance to their employees.
Compliance Corner: How to Calculate MLR Rebate Percentage
- If an employer pays 100% of premiums, none of the MLR rebate is considered plan assets, and the employer may keep the full amount.
- If participants pay 100% of premiums, all of the MLR rebate is considered plan assets and must be used for the benefit of the participants.
- If the employer and participants both pay premiums, the portion of the rebate that is considered plan assets is proportionate to the participants’ percentage of overall premium contributions.
For example, if an employer pays 60% of premiums and employees contribute 40%, 40% of the MLR rebate is considered plan assets.
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.