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Annual Creditable Coverage Notices Due October 14, 2016

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The Centers for Medicare & Medicaid Service (CMS) requires employers who sponsor group health plans to notify Medicare-eligible plan participants whether the plan's prescription drug coverage is creditable, i.e., pays on average as much as standard Medicare Part D prescription drug coverage. CMS provides a model notice for plans with creditable coverage and one for plans with non-creditable coverage.

The determination of creditable coverage status is typically made by the plans’ insurer, TPA or PBM. If you have not yet received correspondence regarding creditable coverage, you should contact your plan’s insurer, TPA or PBM to request this information. Certain plans must have an actuary make this determination.

Employers should use the appropriate CMS model notice and tailor according to their health plan terms. Since it is difficult for employers to know which plan participants are Medicare-eligible, best practice is to send the notice to all plan participants, including employees on leave and COBRA participants. Notices must be provided annually by October 14th as well as mid-year based on trigger events listed below:

  1. prior to Medicare Part D’s annual coordinated election period (October 15 - December 7);
  2. before an individual's initial enrollment period in Medicare Part D;
  3. before plan coverage is effective for Medicare eligible individuals;
  4. when prescription drug coverage ends or creditable coverage status changes; and
  5. when requested by a plan participant.

Be sure to provide the notice in both (1) your new hire packet containing enrollment materials, and (2) your annual open enrollment packet.  It is important to retain documentation that the required notices were sent, in case an issue arises or proof is requested during an audit.  See links below for summaries of additional requirements.

 Lastly, employers must notify CMS of creditable coverage status annually via online disclosure at CMS.gov. This notification is required within 60 days after the beginning of each plan year and when changes to creditable coverage status occur mid-plan year.

View Summary for basic information on notice requirement due by October 14.

View CMS website for model notices and to make annual online disclosure to CMS.