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| Issue: |
Your company currently provides prescription drug coverage to active and retired employees who are Medicare beneficiaries. Although you are aware of the Medicare Part D drug subsidy that will be available beginning on January 1, 2006, your company is not planning to apply for the subsidy. Must your company still provide a disclosure notice to Part D-eligible individuals who are covered by your prescription drug coverage? |
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Answer: |
Yes. The Centers for Medicare & Medicaid Services (CMS) has indicated that entities that currently provide prescription drug coverage to Medicare beneficiaries must provide a notice of creditable coverage (or non-creditable coverage, as appropriate) to all Part D-eligible individuals who are covered under, or who apply for, the entity's prescription drug coverage. The disclosure notice requirement applies to both entities that are applying for the Part D drug subsidy and those that are not applying for it. These entities include:
- Group health plans including:
- employers and unions;
- multiple employer welfare arrangements (MEWAs);
- churches;
- federal, state and local governments;
- Department of Veterans Affairs; and
- military coverage, including TRICARE;
- Health insurance issuers;
- State-sponsored plans;
- Indian health services, tribe or tribal organizations and urban Indian organizations;
- Medicare supplement (Medigap) insurers; and
- Other entities and/or programs that offer prescription drug coverage to active and retired Medicare-eligible individuals.
What is the purpose of the notice? CMS explains that disclosure of whether prescription drug coverage is creditable (in other words, the actuarial value of the coverage equals or exceeds the actuarial value of standard Medicare prescription drug coverage) provides Medicare beneficiaries with important information relating to their Medicare Part D enrollment. Beneficiaries who are not covered under creditable prescription drug coverage and who choose not to enroll before the end of their initial enrollment period for Part D likely will pay a higher premium on a permanent basis if they subsequently enroll in Part D.
Timing of notice. At a minimum, disclosure must be made at the following times:
- prior to the Medicare Part D Annual Coordinated Election Period (ACEP)—beginning November 15th through December 31st of each year;
- prior to an individual’s Initial Enrollment Period (IEP) for Part D;
- prior to the effective date of coverage for any Medicare eligible individual that joins the plan;
- whenever prescription drug coverage ends or changes so that it is no longer creditable or becomes creditable; and
- upon a beneficiary’s request.
Content of notice. CMS has provided sample language that entities can (but are not required to) use when disclosing creditable coverage status to beneficiaries. The sample/model language applies to the Initial Open Enrollment Period (IEP) only (November 15, 2005 --May 15, 2006). CMS indicates it will provide subsequent sample/model language in further guidance for new plan enrollees (those with Part D Initial Enrollment Periods after May 15, 2006) and for use in future plan years.
Source: CCH Employee Benefits Management Directions |
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