The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 added a new prescription drug program to Medicare. Medicare Part D is a voluntary program that provides outpatient prescription drug coverage to eligible individuals. Because some individuals who are eligible for Part D also might be eligible for prescription drug coverage from another source-such as an employer-sponsored health plan-these individuals are entitled to receive a Notice of Creditable Coverage (or, if appropriate, Notice of Non-Creditable Coverage), which explains how this other coverage compares to Medicare Part D. Drug coverage is "creditable" if its actuarial value is at least as great as the actuarial value of the standard Part D coverage. This information is important because individuals who decline Medicare Part D when first eligible are assessed a penalty if they later decide to enroll, unless they have had creditable coverage in the meantime.
In addition to providing the appropriate notice to individuals who are eligible for Medicare Part D, affected employers must disclose to the Centers for Medicare and Medicaid Services (CMS) whether the prescription drug coverage they provide is creditable. Disclosure is provided through an electronic Disclosure Notice form that is available on the CMS Web site (http://www.cms.hhs.gov/apps/ccdisclosure/default.asp). This electronic form is the only option for providing the required notice.
Most employers-even those that do not offer any type of prescription drug coverage to retirees-are affected by the Disclosure Notice requirement, because it is required if the employer plan provides prescription drug coverage to any Medicare-eligible individuals (for example, active employees over age 65 and spouses or other dependents who are Medicare-eligible for any reason, including age, disability or end-stage renal disease). Disclosure is required whether an employer plan is primary or secondary to Medicare.
Employers that contract with a Part D plan to provide prescription drug coverage (or that contract directly with Medicare as a Part D plan) are exempt from the disclosure requirement. Also, an employer that does provide prescription drug coverage to retirees, and that has been approved for the Retiree Drug Subsidy, does not need to file the Disclosure Notice with CMS with respect to the retirees for whom the employer is claiming the subsidy.
The Disclosure Notice must be submitted to CMS annually. The initial Disclosure Notice must be provided by March 31, 2006, for plan years that end in 2006. For 2007 and later plan years, disclosure must be provided within 60 days after the beginning of the plan year. Also, a Disclosure Notice must be submitted within 30 days after a prescription drug plan's termination, and within 30 days after any changes that affect the creditable coverage status of the plan.
Generally, an employer will be required to submit only one disclosure form. Though prescription drug coverage may be provided under different benefits options (HMO, PPO, etc.), separate Disclosure Notices are not required for each option (but the form does ask for the number of different options).
The information required by the Disclosure Notice includes the following-
- Identifying information about the entity filling out the form, including employer name, EIN, address and telephone number.
- Period of time covered by the Disclosure Notice (i.e., the beginning and ending calendar dates of the "plan year" covered in the Notice, which CMS defines as the beginning and ending dates of the employer's annual renewal or contract period).
- Number of benefits options offered to Medicare-eligible individuals.
- Creditable coverage status of the benefits options offered.
- Estimated number of Medicare Part D eligible individuals who are expected to be covered under the benefits options as of the beginning of the plan year, and an estimated number of the individuals expected to be covered under a retiree health plan.
- Latest date on which the Notice of Creditable Coverage (or Notice of Non-Creditable Coverage) was provided to eligible individuals.
The CMS Web site (www.cms.hhs.gov/creditablecoverage) provides guidance on this and other questions about Medicare Part D. Contact us for additional information.