Group health plan sponsors are required to disclose to the Centers for Medicare and Medicaid Services (CMS) whether their plan’s prescription drug coverage is ‘creditable’. Prescription drug coverage is creditable if it pays, on average, as much as or more than Medicare Part D pays for prescription drug coverage. The disclosure must be made within 60 days of the start of the employer’s health plan year.
Applies to:
All group health plan sponsors that offer prescription drug coverage, regardless of size and funding type.
Go Deeper:
The Medicare Prescription Drug Improvement and Modernization Act (MMA) of 2003 requires entities offering prescription drug coverage through group health plans to disclose to CMS the creditable status of their prescription drug offering. Plan prescription drug coverage is considered creditable when its actuarial value is equal to or above the actuarial value of Medicare Part D benefits.
Manner of Disclosure:
Employers can utilize the CMS Website to make the disclosure. Assuming the employer has internet access, this is the only option for disclosure.
Disclosure Content:
The following pieces of information are requested in the CMS disclosure form:
- Employer identification (name, EIN, address, phone number);
- The type of entity sponsoring the plan;
- The creditable or non-creditable status of the plan option(s);
- Plan year (beginning and ending date);
- An estimated total number of Medicare Part D eligible individuals expected to be covered under either creditable or non-creditable plan options;
- Date the annual creditable coverage notice was provided to Medicare Part D eligible individuals; and
- Confirmation of whether the creditable status of the plan changed from the previous year.
Disclosure Timing:
The Medicare Part D disclosure to CMS must occur:
- Within 60 days of the start of the plan year (e.g., by August 30 for a plan year that begins on July 1);
- Within 30 days of the termination of a prescription drug plan; and
- Within 30 days of a change to the prescription drug plan’s creditable status.
Consequences of Non-compliance:
The MMA does not specify any penalties imposed on employers who fail to complete the CMS disclosure.
Practical Implications for Employers:
Note that the creditable status determination used to complete the CMS disclosure should be the same creditable status determination that was disclosed to benefit-eligible employees using the Medicare Part D Notice. As such, the employer should already be aware of the plan’s Medicare Part D creditable status and equipped to complete this online disclosure. Importantly, it is uncommon for the insurance carrier or TPA to complete this disclosure on behalf of employers; so, employers should ensure that HR staff or their broker/agent are completing this requirement.