Prior to the Medicare Part D annual enrollment period and no later than October 14, 2016, employers that provide prescription drug coverage must provide a notice of creditable or non-creditable coverage to Medicare-eligible individuals. Creditable coverage means that on average the plan will pay as much as the standard RX drug plan under Medicare Part D. These notices help individuals decide whether or not they should remain in their current plan or enroll in Medicare Part D during the annual open enrollment period. Individuals that drop their prescription drug coverage or do not have creditable coverage for at least 63 consecutive days will be faced with higher premiums if they enroll in Medicare Part D at a later date. The Centers for Medicare & Medicaid Services (CMS) provides a Creditable Coverage Simplified Determination method that employers will find helpful in determining if their plan provides creditable coverage.
Medicare eligible individuals include individuals who are covered under or are eligible for the employer’s prescription drug plan as follows:
- Under age 65 and disabled;
- Active employees who are age 65 and older and their dependents;
- COBRA participants who are age 65 and older and their dependents;
- Retirees who are age 65 and older and their dependents
Medicare provides a model notice that can be used by employers. As long as the October 14th deadline is met, the required notices may be included in annual enrollment materials, through a separate mailing or electronically if the employer satisfies the Department of Labor safe harbor rules for electronic distribution. If the employer does not offer prescription drug coverage the notice is not required.