Medicare Part D: Prescription Drug Coverage Notice – Due No Later Than October 15th

On an annual basis, the Centers for Medicare and Medicaid Services (CMS) require all employers who provide a group health plan to their employees to disclose whether the plan has creditable drug coverage under Medicare Part D.

Employers must notify CMS and all Medicare-eligible participants in the health plan of the plan’s drug coverage status. Individuals are Medicare-eligible if entitled to Medicare A and/or enrolled in Part B.

Individuals who fail to enroll in Medicare Part D prescription drug coverage when first eligible may be subject to late enrollment penalties if they go 63 consecutive days or longer without creditable prescription drug coverage.

Creditable prescription drug coverage is coverage that is expected to pay at least as much as Medicare’s standard prescription drug coverage. A drug plan is creditable if it:

• Provides coverage for brand and generic prescriptions
• Provides reasonable access to retail pharmacies
• Designed to pay on average at least 60% of participants’ prescription drug expenses

The link below provides a calculator methodology for determining creditable coverage: https://www.cms.gov/Medicare/Prescription-Drug Coverage/CreditableCoverage/Downloads/CCSimplified091809.pdf

Required Creditable Coverage Disclosures to CMS and to Eligible Employees

Medicare Part D imposes two annual notice requirements on employers who offer group health plan coverage with a prescription drug benefit:

• Entities that provide prescription drug coverage to Medicare Part D eligible individuals must disclose to CMS whether the coverage is “creditable prescription drug coverage.” An online notification to CMS is due 60 days after your plan renewal. For example, if your plan year renews May 1st, you will need to complete the CMS notice by June 29th. This disclosure is required whether the employer’s coverage is primary or secondary to Medicare. Please visit the CMS website at www.cms.gov/creditablecoverage and use the online Disclosure to CMS Form.
• Notice to Medicare Part D eligible employees indicating whether the coverage is creditable or non-creditable
  • The employer is required to send participants a Notice of Creditable Coverage (or a Notice of Non-Creditable Coverage) no later than October 15, 2024, before the start of the Medicare Part D annual enrollment period, and this year’s Notice will verify the creditability of the current plan year. Disclosure of whether employer-sponsored prescription drug coverage is creditable allows individuals to make informed decisions about whether to remain in their current prescription drug plan or enroll in Medicare Part D during the Part D annual enrollment period.
    • It can be difficult to identify everyone eligible for your plan who may be Medicare-eligible (dependents who are eligible due to age or Social Security disability). For this reason, we recommend sending notices to all active employees, retirees on your medical plan and COBRA participants.
  • First-class mailing is a universally accepted method. The notice may be able to be distributed electronically if the Department of Labor’s guidelines for electronic delivery of group health plan materials are followed. These guidelines are situation-specific and should be discussed with your organization’s legal counsel.

Employers who contract with Medicare directly as a Part D plan or that contract with a Part D plan to provide qualified prescription drug coverage are exempt from the disclosure requirement.

Click here to download the Creditable Coverage Disclosure Notice Template

Click here to download the Non-Creditable Coverage Disclosure Notice Template

If you have further questions, don’t hesitate to contact us.