If your organization sponsors a group health plan that includes prescription drug coverage, you are required each year to determine whether that coverage is creditable or non-creditable and disclose that information to both Medicare-eligible individuals and the Centers for Medicare & Medicaid Services (CMS). Coverage is considered creditable if it is at least as good as Medicare Part D’s standard prescription drug benefit in terms of value.
This requirement applies to all plan sponsors — including those that provide coverage only to active employees and not to retirees. The reason is important: individuals who do not enroll in Medicare Part D when first eligible, and who do not have creditable coverage for 63 days or longer, may be subject to permanent late enrollment penalties. That’s why individuals and CMS need to know the coverage status well in advance of Medicare’s annual open enrollment.
Each year, plan sponsors must issue a written notice to all Medicare Part D-eligible individuals disclosing whether their current prescription coverage is creditable or not. This notice must be provided before the start of the Medicare Part D enrollment period, and at certain trigger points such as when coverage changes. In addition, employers must submit an annual disclosure to CMS within 60 days of the start of their plan year.
Staying on top of this compliance requirement protects your employees and retirees from costly penalties — and keeps your organization in good standing with federal regulations. If you need help determining your plan’s creditable status or preparing the required disclosures, aHRrow’s team is ready to support you.