Action Needed: By November 14, 2009
Once again, it is time to make sure that individuals with employer-sponsored prescription drug coverage have been given the required annual Medicare Part D notices. Employers are required to give a notice to any person covered by their health plan who is also covered by Medicare, both upon enrollment and again by each November 14th. The notice explains when Medicare prescription drug coverage is available, and what someone should consider if they are eligible to enroll in Medicare prescription drug coverage. The Centers for Medicare and Medicaid Services ("CMS") have recently released updated models that can be used to give the required notices.
If you sponsor a group health plan that has prescription drug coverage, you are required to give an annual disclosure notice about Medicare "Part D" prescription drug coverage. A notice is also required to be given when any Medicare eligible individual enrolls in the plan, if you make a change to your prescription drug coverage that affects whether it is creditable or not creditable, and upon request. Even if you do not provide retiree coverage, you still need to give this notice. Most employers do not know whether someone enrolled in their plan is also covered by Medicare.
Therefore, employers need to give the annual notice to all covered individuals, to be sure that everyone with Medicare coverage receives the notice. Only plan sponsors who contract with Medicare directly as a Part D plan or who contract with a Part D plan to provide qualified prescription drug coverage are exempt from the disclosure requirement.
In its recent guidance, CMS eliminated the "personalized" model notice and updated the "individual" model notices. The "individual" model notice now includes an optional box that can be filled in with personalized information, if a participant requests a personalized notice. The updated forms and updated general guidance from CMS can be found on the CMS website by clicking
here.
In order to provide the information required in the notice, you must determine whether your prescription drug coverage is at least as good as the Medicare "Part D" prescription coverage. Coverage as good as Medicare prescription coverage is called "creditable" coverage. Medicare Part D prescription coverage became available beginning January 1, 2006 to anyone covered by Medicare; the coverage is provided by private insurance companies. If an individual does not enroll in Medicare Part D prescription drug coverage when they are initially eligible, they pay a higher premium of 1% for each month that elapses before they are enrolled. However, months when the individual had other "creditable" coverage do not count in calculating the premium increase as long as the individual does not have a 63-day break in creditable coverage. This is why the rules require employers to give notices. The rules also require notice to be given if the prescription drug coverage changes in a way that affects whether the coverage is creditable.
CMS also requires employers to annually report to CMS whether their coverage is creditable, on a Disclosure to CMS Form that is also available
here. The Form must be submitted electronically through the CMS website within 60 days of the beginning of each plan year, so if your health plan is on a calendar year, you must next submit the form by March 1, 2010. The notice also must be provided again within 30 days after termination of prescription coverage or of any change in the status of the coverage as creditable coverage. There is an exemption from the filing requirement for plans that contract with Medicare or a Part D provider to provide Part D Medicare coverage. No filing is required for a plan that provides prescription coverage solely through one of those means.
If you have any questions or would like to discuss the Medicare Part D notice requirements,
Alison Stemler,
Laura Boyett or any of the members of the
Employee Benefits Group would be happy to assist you.