Each year employers must provide a written notice to Medicare-eligible employees who are covered under their group health plan. The notice must include information about the creditable coverage status of the prescription drug benefit. In other words, the notice tells employees if the prescription drug benefit on the group health plan is at least as good as the standard Medicare Part D plan.
Anyone who is eligible for Medicare but delays enrollment in a Part D plan is subject to a late enrollment penalty unless they have creditable coverage elsewhere. The late enrollment penalty is 1% of the base beneficiary premium for every full month a Medicare-eligible person is without creditable coverage and forgoes enrollment in Part D. The notice provided to Medicare-eligible employees helps them understand if they may be subject to a late enrollment penalty if they delay enrollment in Part D.
One of two notices must be provided to Medicare-eligible employees. A creditable coverage notice should be provided when the drug benefit is at least as good as the standard Medicare Part D plan. A non-creditable coverage notice should be provided when the drug benefit is not as good as the standard Part D plan. Most prescription drug benefits included under a group health plan are creditable, but CMS has provided a Simplified Determination document to help employers figure out the creditable coverage status in the event that’s unknown.
The notice must be distributed prior to October 15th (meaning it must be distributed by October 14th) which is when the Medicare Advantage and Part D annual enrollment period begins. The annual enrollment period will run through December 7th. The notice must also be distributed at other times, such as when creditable coverage status changes or when a Medicare-eligible employee first joins the plan.
Additionally, the notice should be provided to any covered dependents who are eligible for Medicare, including those who become eligible for Medicare due to a disability. COBRA beneficiaries and covered retirees who are eligible for Medicare should also be provided a notice. As a best practice, employers may want to provide this notice to everyone covered under their group health plan.
Model Part D model notices have been provided by CMS and are available in English and Spanish.
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