Medicare Part D Reminders
The Medicare Modernization Act (MMA) mandates that certain entities offering prescription drug coverage, including employer and union group health plan sponsors, provide disclosure to the Centers for Medicare & Medicaid Services (CMS) on an annual basis via an online form.
The annual creditable coverage disclosure is required to CMS no later than 60 days from the beginning of a plan year (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.
Employers should provide model notices (Creditable and Non-Creditable) to plan participants by October 15, prior to the beginning of the Medicare Part D annual coordinated election period.
Creditable Coverage Definition
Drug coverage is creditable if the actuarial value of the coverage equals or exceeds the actuarial value of standard Medicare prescription drug coverage. In general, this actuarial determination measures whether the expected amount of paid claims under the entity’s prescription drug coverage is at least as much as the expected amount of paid claims under the standard Medicare prescription drug benefit. Further instructions and specific guidance are provided here.
Online Disclosure Form Link
Member Model Notices
Please note, in addition to employers providing the model notices by October 15, they should be distributed to plan participants at the following times:
- In advance of an individual's initial enrollment period.
- Prior to the effective date of coverage for any Medicare-eligible individual that joins the plan.
- Whenever Rx coverage ends/changes so that it is no longer creditable or becomes creditable.
- Upon the request of a beneficiary.
Retiree Drug Subsidy Program
If a plan’s coverage is creditable, employers can elect to pursue a 28 percent subsidy called the Retiree Drug Subsidy (RDS) Program. Under the Patient Protection and Affordable Care Act (PPACA), subsidy payments to plan sponsors starting in 2012 will be taxable. This optional step requires additional testing and an application process. Employers can apply for the subsidy by clicking here.
Employers must apply for the subsidy 90 days prior to the beginning of an RDS plan year, which can mirror a benefit plan year. For example, if the employer’s benefit plan year begins Jan. 1, 2013, and the employer wants its RDS plan year to be the same, the employer would apply for the subsidy by Oct. 2, 2012. If the employer requests an extension, CMS will automatically grant an additional 30 days to complete the application.