Group health plan sponsors must provide their Medicare Part D Notices by October 15th. This Notice is often handled by your third-party administrator (TPA) or insurer, but now is a good time to make sure. We are seeing an increasing number of small and mid-sized plan sponsors who have moved to level-funded premium, captive and other self-insured arrangements and do not realize they are responsible for this Notice. Please read below for more information on your obligations.
What is the Notice?
The Part D Notice discloses whether prescription drug coverage under your group health plan is creditable. Coverage is creditable only if its actuarial value equals or exceeds the actuarial value of standard prescription drug coverage - your insurer or third-party administrator should provide this information to you.
Model Notices can be found here: https://www.cms.gov/Medicare/Prescription-Drug-Coverage/CreditableCoverage/Model-Notice-Letters.html
You can choose to use a customized form, but make sure that it contains all of the current provisions of the model form.
Who Gets The Notice?
The Notice must be provided to all Part D eligible individuals enrolled in or seeking to enroll in the coverage, including spouses and dependents if they are otherwise Part D eligible. Since this group could include current or former disabled or retired employees, spouses or dependents, the simplest approach to compliance is to provide a Notice to everyone enrolled or eligible to enroll in your plan.
How Do I Deliver the Notice?
You can deliver a single Notice to the Part D eligible employee and all of his/her Part D eligible dependents. However, if you know that a spouse or dependent who is Part D eligible resides at a different address from the employee, you must provide a separate Notice.
You have flexibility in how you provide the Notice. You may provide it separately or, if certain conditions are met, together with other information provided to participants, such as open enrollment materials or summary plan descriptions (SPDs). If you provide a Notice along with other information, the Notice must be "prominent and conspicuous." This means the Notice portion of the document (or a reference to the section in the document being provided to the individual that contains the required statement) must be prominently referenced in at least 14-point font in a separate box, bolded, or offset on the first page of the other information that is being provided.
You may deliver the Notice by mail, although first-class mail is recommended, rather than certified mail with return receipt requested. You can also deliver the Notice electronically, if you follow the electronic disclosure requirements that apply to summary plan descriptions (SPDs) (found in DOL Regulation Section 2520.104b-1(c)(1)). The difficulty with these electronic delivery requirements is that unless the employee has the ability to access electronic documents at his or her regular place of work and can access your electronic information system on a daily basis as part of his or her work duties (which may be impossible if you are in a non-office situation), you may have to obtain individual consent using a process set forth in the DOL regulations. If you use electronic delivery, you must notify each recipient of the significance of the document, that a paper version is available on request, and that the recipient is responsible for providing a copy of the Notice to his or her covered Medicare-eligible dependents, and you must post the Notice on your website, if applicable, with a link on your home page.
Whatever method you choose, it is important that you retain evidence of delivery (e.g., through logs or certificates of mailing) in case of audit.
What If I Don’t Comply?
There is nothing in the Medicare Part D law that provides a mechanism for CMS to actually enforce penalties or other sanctions for failure to comply with these Part D disclosure requirements, except against plan sponsors claiming the ACA retiree drug subsidy.
The bigger impact may lie with the individual. The information provided in your Medicare Part D Notice is essential to an individual's decision whether to enroll in a Medicare Part D prescription drug plan. If a Part D eligible individual misses his/her deadline to enroll and, as a result, does not have some form of creditable prescription drug coverage in place for 63 days or more, the individual will be charged a higher premium for Medicare Part D prescription drug coverage. The amount of the increase in the premium cost depends on the length of the individual’s gap in coverage.
What If My Plan Is Not Finalized?
If you have not yet finalized your 2019 offerings, you should still provide the Notice now, based on your current offerings. If the status of those offerings changes from creditable to non-creditable (or vice versa), you will need to provide an additional Notice within a reasonable period of time (maximum 60 days) after the change occurs. The original Notice should indicate that the Notice will not be updated if coverage changes but it remains creditable or non-creditable (as applicable).
Additional Notice Triggers & Filing Requirements
This is also a good time to check your processes to make sure that you are providing the Medicare Part D Notice at all of the additional times as required by law:
- prior to an individual's initial enrollment period for Part D (your October 15th annual notice will be deemed to satisfy this requirement);
- prior to the effective date of coverage for any Part D eligible individual who enrolls in your prescription drug coverage;
- if you no longer offer prescription drug coverage or change it so that it is no longer creditable or becomes creditable; and
- upon request by the Part D eligible individual.
Online Disclosure to CMS
In addition to your Notice obligations, you should make sure that you, or your third-party administrator or insurer, complete the Online Disclosure to CMS Form to report the creditable coverage status of your prescription drug plan. The Online Disclosure should be completed annually no later than 60 days from the beginning of a plan year (e.g., contract year, renewal year), within 30 days after termination of a prescription drug plan, or within 30 days after any change in creditable coverage status.