Each calendar year, Medicare Part D requires group health plan sponsors to disclose whether their health plan’s prescription drug coverage is creditable to both individuals who are eligible for Medicare Part D and to the Centers for Medicare and Medicaid Services (CMS).
This article is your reminder that the deadline for CMS disclosure is quickly approaching!
Plan sponsors must provide their annual disclosures to the CMS before February 29, 2024.
With this upcoming deadline, ask yourself:
Do you have to comply with this requirement? And if so, do you know how to?
In this article, we will break down the Medicare Part D disclosure requirements. By reading to the end, you’ll be equipped with a simple and practical approach to easily comply.
What you need to know about Medicare Part D disclosure to CMS
For employers offering prescription drug benefits as part of their sponsored health plans, managing Medicare Part D disclosures is a vital responsibility. As part of this process, annually communicating with the Centers for Medicare & Medicaid Services (CMS) about whether your plan's prescription drug coverage is "creditable” or "non-creditable" is not only an important step but a requirement.
Who needs to comply?
Any employer with a group health plan that provides prescription drug coverage to individuals eligible for Medicare Part D must comply including active employees, disabled employees, COBRA participants, retirees, and their covered spouses and dependents.
This requirement applies regardless of whether your plan acts as primary or supplementary coverage alongside Medicare.
However, if your group health plan does not cover any individuals who are eligible for Medicare Part D at the beginning of the plan year (this includes active employees, disabled employees, COBRA participants, retirees, and their covered dependents), then you are not required to submit the online disclosure form to CMS for that specific plan year.
Determining your plan's creditable status
Figuring out if your plan's drug coverage creditable status basically means comparing its expected payouts for prescriptions to those covered by Medicare Part D.
What is "creditable" coverage?
Creditable coverage means that your plan's prescription drug benefits are as good as, or better than, what Medicare Part D offers. In simpler terms, your plan is expected to cover as much, or more, of the cost of prescriptions compared to Medicare Part D.
What is “non-creditable” coverage?
Non-Creditable coverage, on the other hand, means that your plan's prescription drug benefits don't meet the standards set by Medicare Part D. Essentially, your plan is expected to cover less of prescription costs than Medicare Part D would.
Here's are 3 ways that you can tackle this determination:
1. Ask your insurance carrier
Often, the carrier has already conducted an analysis and can inform you whether your plan is considered creditable.
2. Conduct an actuarial determination
If your insurance carrier hasn't made this determination, or if you prefer to verify the status independently, you may need to conduct an actuarial determination. This process involves a detailed analysis to compare the expected payouts of your plan's prescription drug coverage against those under Medicare Part D. It's a thorough review that assesses whether your plan's coverage is at least as good as, if not better than, Medicare Part D.
3. Use a simplified determination method
For some plans, especially those with straightforward designs, a simplified determination method may be applicable. This approach allows employers to assess their plan's creditable status without delving into complex actuarial calculations. However, it's important to note that not all plans will qualify for this simplified assessment. If your plan's design is more complex, or if it doesn't meet specific criteria for the simplified method, a full actuarial determination will be necessary.
Note: It's important to consider how legislative developments, such as provisions of the Inflation Reduction Act, might impact the determination of your plan's creditable status. These changes could potentially alter the parameters for what constitutes creditable coverage.
Submitting your Medicare Part D disclosure to the CMS
Once you’ve determined your plan’s creditable status, you need to submit your Medicare Part D disclosure electronically to the CMS.
Here's a step-by-step guide on what you need to do:
1. Access the online form
The CMS creditable coverage website hosts the online disclosure form you need. This online platform is the only way to comply with the disclosure requirement (unless you're in the unique position of not having internet access).
2. Fill out the required information
When completing the online form for CMS, you'll be asked to furnish specific details to give CMS a thorough overview of your plan's prescription drug coverage.
This includes information on the types of coverage your plan provides, the variety of coverage options available, and whether your coverage is deemed creditable or non-creditable. Additionally, you'll need to specify the time period that the disclosure notice encompasses, the count of Part D-eligible individuals covered under your plan, the date on which you issued the creditable coverage disclosure notice to those eligible for Part D, and any alterations in the creditable coverage status of your plan.
This comprehensive data collection ensures that CMS has all the necessary information to assess your plan's compliance with Medicare Part D requirements.
3. Follow the CMS instructions to submit
To help you complete the form, CMS offers detailed instructions and guidance.
Key deadlines for Medicare Part D disclosures and notices
Understanding and adhering to the deadlines for Medicare Part D disclosures and notices is crucial. These deadlines ensure that both the CMS and individuals eligible for Medicare Part D are informed about the creditable status of your plan's prescription drug coverage.
A comprehensive breakdown of these important timelines
Timing of disclosures to the CMS:
Employers must notify CMS about their plan's creditable coverage status according to the following schedule:
Annually
Disclosure must be made within 60 days after the start of the plan year. This year the annual online disclosure deadline for calendar year plans is February 29, 2024.
Upon Termination
If a plan's prescription drug coverage ends, disclosure is required within 30 days after termination.
Coverage Status Change
Any change in the plan's creditable coverage status necessitates a disclosure within 30 days.
Timing of notices to individuals:
In addition to notifying CMS, plan sponsors are also required to inform individuals eligible for Medicare Part D about the creditable status of the plan's prescription drug coverage at the following important times:
Before the Medicare Part D annual election period (Oct. 15 - Dec. 7)
Prior to an individual's initial enrollment period for Part D
Before the effective date of coverage for any Medicare-eligible individual joining the plan
Whenever the prescription drug coverage ends or its creditable status changes
Upon a beneficiary's request
Note: Providing these notices annually before October 15 satisfies the requirement for most scenarios.
For further guidance, employers are encouraged to visit the CMS website, which offers detailed instructions, model disclosure notices, and the online disclosure form. Employers unsure about their plan's creditable coverage status or how to proceed with disclosures should consult with their advisors or contact CMS directly for assistance.
Need help with your Medicare Part D disclosure?
With the February 29, 2024, deadline in sight, it's time for plan sponsors to take action!
Whether you're determining your plan's creditable status for the first time or revisiting your approach in light of recent legislative changes, the steps outlined in this article aim to simplify the process. But, if you are still having trouble with this task, help from a Combined team member is just a click away.
This article is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice.
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