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Your company provides prescription drug coverage to its retirees. In light of the new prescription drug benefit under Medicare Part D, you have been asked to review the options regarding continuation of your retiree drug coverage. If your company decides to provide customized drug benefits for its retirees by becoming a Part D plan, will your company have to meet state licensing requirements as a condition of being a Medicare prescription drug sponsor? |
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Answer: |
No. The Centers for Medicare & Medicaid Services (CMS) has issued guidance regarding two of the options for employers to continue providing retiree prescription drug coverage pursuant to the Medicare Prescription Drug, Improvement and Modernization Act of 2003, which established the prescription drug benefit under Medicare Part D.
One of the options addressed in the guidance is an employer supplementing the standard Medicare drug benefit by providing customized drug benefits by becoming a Part D plan (also called a Prescription Drug Plan or PDP). To encourage employers to become PDPs, CMS has approved several employer group waivers of the requirements that apply to other entities seeking to become PDPs.
State licensure requirements. One of the waivers addresses state licensure requirements. The guidance notes that, in general, a Part D sponsor must be organized and licensed under state law as a risk-bearing entity eligible to offer health insurance or health benefits coverage in each state in which it offers coverage. However, an employer (or union) applying to become a PDP solely for purposes of providing prescription drug coverage to its retirees will not have to meet state licensing requirements as a condition of being a Medicare prescription drug sponsor. However, CMS will require such entities to certify that they meet solvency standards and/or have other safeguards that CMS will identify in additional guidance.
Other waivers. CMS also has approved several other employer group waivers for retiree drug coverage under Medicare Part D. These waivers include an extension of the Part D timeline for retiree group plans. In addition, CMS has waived requirements for:
- Governmental entities;
- Restricted enrollment;
- Service areas; and
- Minimum enrollment.
Source: Part D Waiver Guidance for Employer/Union Retiree Coverage, February 11, 2005. |
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