Creditable Coverage

Question:

I reported “creditability” of my prescription plans in March of this year and now I am getting notices that it is due in October.  Are these the same notices?  Is this the same creditable coverage document and what do I need to do?

Answer:

Creditable coverage documents and notices can be confusing because they include two different “parts”.  Do not confuse the reporting of Creditability to the Centers for Medicare and Medicaid Services (CMS) with the notices you must provide to your employees.

Group health plans offering prescription drug plans to members over the age of 65 (whether primary or secondary coverage) are required to report the creditability of the plan and provide those eligible for coverage a creditability notice.  Employers must provide not only those employees and dependent insured under the plan but those that may be eligible to be insured under the plan a Creditable Coverage document.  This document informs individuals whether or not the drug coverage your plan provides is creditable or actuarially equivalent to what is available under the standard Medicare Part D plan.

These notices must be sent out AT LEAST once a year BEFORE October 15 and prior to an individual’s initial Medicare enrollment period.  The easiest way to do this is to send it to ALL PARTICIPANTS annually and easier yet is to add it to the open enrollment materials which can include this along with all of the other alphabet soup items necessary for distribution (SPD, CHIPRA, HIPAA, WHCHRA, etc….).  A sample of the notices that must be distributed can be found here. 

Specifically, the Medicare Part D Creditable Coverage notices (creditable and non-creditable) can be found here.

The notices to employees (above) should not be confused with CMS notification.  In addition to the notices provided to employees, employers are also required to report the creditability of their plan online to CMS each year.  For plans that are on a calendar year (think January renewal), creditability must be reported no later than March 1.  A link to that reporting mechanism is here. The online disclosure should be completed annually no later than 60 days from the beginning of a plan year, within 30 days after termination of a prescription drug plan, or within 30 days after any change in creditable coverage status.  Because of these different due dates, it may be easier for employers to send out BOTH notices in March rather than October.

With all of these requirements, there is good news!  Your broker or group health care provider can tell you whether or not your plan is creditable AND The Centers for Medicare and Medicaid Services provides the model notices and a direct link to the online form for reporting.  Creating and distributing these notices should be fairly easy and a quick item to knock off your to do list.  Just get the notices on your calendar each year and don’t forget to include both pieces.

 

strategic HR inc. knows that keeping abreast of legal compliance issues can be daunting, especially when the laws keep changing. We can help you stay compliant by fielding your questions and offering resources to help you identify and mitigate compliance issues. Visit our Compliance page to learn about our auditing services which can help you identify trouble spots in your HR function.