Within 60 days of the start of each new medical plan year, employers (regardless of size) must notify the Centers for Medicare and Medicaid Services (CMS) whether their prescription drug plan options are creditable or non-creditable with Medicare Part D. In other words, whether the plans are expected to pay at least as well as Part D.
If prescription drug creditability changes during the plan year, or if the plan terminates, the deadline is shortened to 30 days. For calendar year plans, the standard reporting deadline is March 2. If credibility changes or the plan terminates, the deadline moves up to January 30.
Applies to
Employers of any size sponsoring a fully insured, self-insured, or level-funded medical plan with prescription drug coverage. Currently, this also appears to include HRAs that reimburse prescription drug costs and ICHRAs that reimburse both insurance premiums and prescription drug costs. CMS has suggested that future guidance might remove the reporting requirement for HRAs and ICHRAs, but this guidance is not yet effective.
How to Complete
Employers must submit their creditable/non-creditable status via the CMS Creditable/Non-Creditable web form.
The webform should take less than five minutes to complete. It is straightforward, but the employer must know the answers to the following questions:
- Whether all prescription coverage options offered are creditable, non-creditable, or a combination of creditable and non-creditable (note, the employer must disclose creditability for the upcoming plans with open enrollment materials, so the employer should already know this information when it is time to submit this disclosure to CMS)
- The last date the employer provided employees with a creditable and/or non-creditable coverage notice for the plan year that just started (note, this will often be the date the employer provided open enrollment materials)
- An estimate of the number of Medicare-eligible employees, spouses, and dependents enrolled in the employer’s prescription drug plans (this can be zero if the employer is not aware of anyone eligible for Medicare due to age, disability, or end-stage renal disease)
The employer does not have to log in to a portal or download a template, but that also means there is no way to log in and see proof of prior submissions. So, once the employer submits the information, they should keep a copy for their records.
Penalties for Non-Compliance
There is no specific penalty for not submitting the report to CMS. However, completing it demonstrates good faith compliance. Employers should note that failure to properly determine credibility could negatively affect Medicare-eligible participants, especially those who delay enrolling in Part D.
Practical Impact on Employers
This process is very straightforward for reporting credibility to CMS. The only complicated part might be determining whether the prescription drug plans are creditable or not when the insurance carrier, third-party administrator (TPA), or pharmacy benefits manager (PBM) will not make that determination for the employer. Erroneously calling a prescription plan creditable when it does not meet the creditability requirements can have adverse consequences to the employer and to participants in that plan who wait to enroll in Medicare Part D until after 65. So, it is best to have an actuarial-based determination of creditable coverage status.