Employer Medicare Part D Disclosure and Reporting Obligations

 September 23 2016     Shelly Hodges-Konys

The Social Security Act requires plan sponsors offering prescription drug coverage to provide certain notices regarding the prescription drug coverage they offer. Medicare Part D Notices of Creditable or Non-Creditable Coverage must be updated and provided to Medicare eligible participants by October 14th. Notices to Medicare Part D-eligible individuals must, at a minimum, be provided prior to the start of the annual Medicare Part D enrollment period which runs October 15 through December 7 each year.

Required Action
Employers are required to provide two notices relating to prescription drug coverage. The notices require employers to:

  1. Provide written notification to plan participants explaining whether the coverage is “Creditable” or “Non-Creditable”
    a. Prior to the Medicare annual enrollment period
    b. Prior to an individual’s initial Medicare enrollment period
    c. Prior to the effective date of coverage for Medicare eligible individuals
    d. Upon request
  2. Notify the Centers for Medicare and Medicaid Services (CMS) about the status of its drug coverage
    a. No later than 60 days after the start of its plan year
    b. Within 30 days of termination of the prescription drug plan
    c. Within 30 days of a change impacting the creditable status of the plan

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 requires group health plans to disclose to individuals eligible for Medicare Part D whether the plan's coverage is "creditable" (i.e., whether it is at least actuarially equivalent to the Medicare Part D coverage) or not.
Individuals who do not enroll in Medicare Part D when first eligible and who go 63 days or longer without creditable coverage will have to pay higher premiums permanently when they subsequently enroll in Medicare Part D. Thus, Medicare-eligible individuals need to know the status of their plan's prescription coverage in order to make an informed decision about enrolling in Medicare Part D.

Notices may be provided separately or with other materials like employer open enrollment materials as long as certain conditions are met. CMS has said that notices may be distributed electronically in accordance with Department of Labor electronic distribution guidelines. CMS has issued model forms which can be found at Click on the link for "Creditable Coverage," then "Model Notice Letters." Following is a link:

To complete the disclosure of your plans status to CMS, click on the link for “Disclosure to CMS Form.” Following is a link:

Please contact your HORAN account representative with additional questions.

The above is provided for informational purposes only and is not intended as, nor should it be construed as legal advice. Neither HORAN nor its consultants provide legal, tax nor accounting advice of any kind. Please consult your counsel for a definitive interpretation of current statute and regulation and its impact on your organization. Thank you.