Each year, employers (and other plan sponsors) that provide prescription drug coverage are required to provide Medicare-eligible participants with notices of creditable or noncreditable coverage regarding their prescription drug coverage. This Medicare Part D annual notice is required to be provided prior to the annual enrollment period for Medicare Part D (Medicare’s prescription drug coverage program). Among the many changes instituted by healthcare reform last year, the annual enrollment period for Medicare Part D plans was moved forward from November 15 (through December 31) to October 15 (through December 15). As a result, beginning this year, employers (and other plan sponsors) providing prescription drug benefits to Medicare-eligible participants must disclose to those participants whether -5- Health Law Update–July 21, 2011 their prescription drug coverage is creditable or noncreditable prior to October 15. Previously, these notices had to be provided each year prior to November 15.
As a bit of background, creditable coverage pays as much as or more than the standard Medicare Part D prescription drug plan, and participants with such coverage can enroll in Medicare Part D plans after the initial enrollment period without premium penalties. Noncreditable coverage pays less than the standard Medicare Part D prescription drug plan, and participants with such coverage may still enroll in Medicare Part D plans but may face significant premium penalties if enrolling after the initial enrollment period. Due in part to this potential of premium penalties, employers (and other plan sponsors) have been tasked, by law, with notifying their Medicare-eligible prescription drug plan participants as to whether their prescription drug coverage is creditable.
The practical effect of moving the start of the Medicare Part D annual enrollment period to October 15 is the acceleration of the planning process associated with delivering these creditable and noncreditable coverage notices. Employers (and other plan sponsors) should begin planning now for this shortened timetable by determining whether coverage for the upcoming year is creditable and preparing the notices of creditable coverage and/or noncreditable coverage. Also, many employers (and other plan sponsors) are accustomed to delivering these creditable and noncreditable coverage notices with their open enrollment materials; however, the new October 15 deadline will require such employers (and other plan sponsors) to consider separately delivering the creditable and noncreditable coverage notices ahead of other open enrollment materials or, alternatively, moving up their entire open enrollment schedule.