Medicare Part D Notices Due Before October 15th

Each year, Medicare Part D mandates that group health plan sponsors inform individuals eligible for Medicare Part D, as well as the Centers for Medicare and Medicaid Services (CMS), about whether the health plan’s prescription drug coverage is considered creditable.

Plan sponsors are required to send the annual disclosure notice to Medicare-eligible individuals before October 15, 2024—the beginning of the Medicare Part D annual enrollment period.

This notice is crucial because Medicare beneficiaries without creditable prescription drug coverage who delay enrolling in Medicare Part D may face higher premiums if they choose to enroll later. While there are no direct penalties for not providing this notice, neglecting to do so could negatively impact employees.

Action Steps

Employers need to verify whether their health plans’ prescription drug coverage is classified as creditable or non-creditable. They must also prepare to distribute their Medicare Part D disclosure notices before October 15, 2024. To streamline this process, many employers include Medicare Part D notices in the open enrollment packets they send out before the October deadline.

Creditable Coverage

A group health plan’s prescription drug coverage is deemed creditable if its actuarial value is equal to or greater than that of standard Medicare Part D prescription drug coverage. This actuarial assessment generally evaluates whether the anticipated amount of claims paid under the group health plan’s prescription drug coverage meets or exceeds the expected claims paid under the Medicare Part D prescription benefit. For plans offering various benefit options (such as PPO, HDHP, and HMO), the creditable coverage evaluation must be conducted separately for each option.

Model Notices

CMS has provided two model notices for employers to use:

Employers are not obligated to utilize the model notices provided by CMS. Nonetheless, if they choose not to use this model language, the notices from a plan sponsor must contain specific information. This includes a disclosure regarding whether the plan’s coverage is considered creditable, along with explanations of what creditable coverage means and its significance.

Notice Recipients

The credible coverage disclosure notice is required for individuals eligible for Medicare Part D who are currently covered by, or applying for, the health plan’s prescription drug coverage. A person qualifies for Medicare Part D if they:

In general, a person is entitled to Medicare Part A once they have actual coverage, rather than just at their initial eligibility. Those eligible for Medicare Part D may include active employees, disabled employees, COBRA participants, retirees, and their covered spouses and dependents.

In practice, group health plan sponsors typically distribute the creditable coverage disclosure notices to all participants in the plan.

Timing of Notices

At the very least, credible coverage disclosure notices should be given at these specific times:

To meet the requirements for items (1) and (2) above, it is essential that the credible coverage disclosure notice be given to all plan participants annually before October 15. The term “prior to” indicates that individuals must have received the notice within the last 12 months. Alongside delivering the notice each year before October 15, plan sponsors should also think about incorporating it into the enrollment materials for new hires.

Method of Delivering Notices

Plan sponsors have the option to determine how they deliver their creditable coverage disclosure notices. These notices may be sent separately, or, if specific criteria are met, they can accompany other materials for plan participants, such as annual open enrollment documents. In some cases, electronic delivery of the notices is also permissible.

Generally, a single disclosure notice can be issued to the Medicare beneficiary and all Medicare Part D-eligible dependents covered by the same plan. However, if it is known that any spouse or dependent eligible for Medicare Part D resides at a different address from where the participant materials were sent, a separate notice must be provided to that Medicare-eligible spouse or dependent living at the alternate address.

Electronic Delivery

Creditable coverage disclosure notices can be sent electronically under specific conditions. The Centers for Medicare & Medicaid Services (CMS) has provided guidance allowing health plan sponsors to utilize the electronic disclosure standards established by Department of Labor (DOL) regulations for this purpose. According to CMS, these regulations permit a plan sponsor to send a creditable coverage disclosure notice electronically to plan participants who can access electronic documents at their workplace, provided they regularly use the sponsor’s electronic information system as part of their job responsibilities.

The Department of Labor’s regulations regarding electronic delivery stipulate that:

If a plan sponsor opts for electronic delivery, they must notify the plan participant that it is their responsibility to provide a copy of the electronic disclosure to their Medicare-eligible dependents covered by the group health plan.

Moreover, CMS guidance states that a plan sponsor can send a disclosure notice electronically to retirees if the Medicare-eligible individual has confirmed they have sufficient access to electronic information. Before individuals consent to receive their information electronically, they must be informed of their right to request a paper version, how to revoke their consent and update their address, as well as any hardware or software requirements needed to access and retain the creditable coverage disclosure notice.

Should the individual agree to receive the notice electronically, they must provide a valid email address to the plan sponsor, and their consent must be submitted electronically. This procedure, according to CMS, ensures the individual can access the information and that the system used for delivering these documents guarantees actual receipt. In addition to sending the disclosure notice to the individual’s email, the notice (with the exception of personalized notices) must also be posted on the plan sponsor’s website, if applicable, along with a link to the disclosure notice on the sponsor’s homepage.

Disclosure to CMS

Plan sponsors are obligated to inform CMS about the creditable status of their prescription drug coverage. This disclosure must be submitted to CMS annually or whenever there is a change that impacts the creditable nature of the coverage. At the very least, the CMS creditable coverage disclosure notice should be provided during the following instances:

Plan sponsors must submit the disclosure notice to CMS by filling out the disclosure form available on the CMS Creditable Coverage Disclosure webpage. This is the only accepted method for meeting the CMS disclosure requirements, unless a particular exception is applicable.