January 1 Plans Need To File Their Medicare Prescription Drug Disclosure With CMS Soon

Businesses that offer prescription drug coverage to Medicare Part D-eligible beneficiaries (including active employees, dependents, and retirees) need to provide annual disclosures to both those plan participants and the federal Centers for Medicare and Medicaid Services (CMS). For calendar year plans (January 1 renewals), the annual deadline for submitting the CMS disclosure is March 1st

Each year, most employer plan sponsors have to tell beneficiaries and the federal government if the drug benefits they offer are "creditable." In other words, if the group coverage covers as much, in average terms, as the standard Medicare Part D prescription drug plan. Notices need to be distributed each year before the Medicare annual election period begins on October 15. Employer plans also need to submit an online disclosure form to CMS no later than 60 days after starting the group plan year.

Each employer group needs to independently assess the creditability status of every plan option they offer that includes prescription drug benefits. There are a few ways a group plan sponsor can determine if their benefits cover, on average, as much as the standard Medicare Part D prescription drug plan. First, if the employer offers fully-insured coverage, then the insurance carrier should be able to verify if the drug benefit is creditable or not. An employer can also use the simplified determination guidance from CMS to assess most prescription drug plan options' status. Suppose the simplified determination doesn't work for the group's plan design, or the employer wishes to apply for the CMS Retiree Drug Subsidy Program. In that case, an independent actuary should value the benefits.

There is no requirement that an employer offers Medicare creditable coverage, and there is no penalty to any group that doesn't. The only things employer groups providing prescription drug benefits to anyone who might be Medicare-eligible must do are: (1) tell federal government through the annual disclosure, and (2) send proper notice each year to all active employee plan participants and covered retirees that could be Medicare-eligible. Suppose the employer plan's prescription drug coverage doesn't happen to be creditable. In that case, the business's only obligation is honesty in both the annual CMS disclosure and their notice to plan participants. If Medicare-eligible beneficiaries learn their group plan isn't creditable, then they can decide if they want to enroll in a higher-value Medicare Part D plan instead.

The procedure for notifying CMS about a plan's creditable coverage status is quick and painless—it just needs to be done on time. The plan sponsor should access the online form to complete the disclosure and enter the plan's contact information and the employer's federal tax identification number. The plan sponsor needs to attest if all or some of the plan's prescription drug offerings are creditable or not and submit the form. If an employer group offers multiple prescription drug offerings, then the plan sponsor needs to complete a disclosure form for each plan option.

Once an employer has completed the drug coverage benefits testing for the year and submitted their form to CMS online, it is an excellent time to update the Medicare Part D Creditable Coverage Notice for plan beneficiaries. This notice must be distributed to Medicare-eligible plan participants before October 15 each year, so most groups give it to all employees in the Fall. However, it also has to be distributed to any Medicare-eligible individual that joins the employer plan mid-year before their effective date of coverage or upon request. It makes sense for employers to update the notice early on in the plan year, simultaneously with their CMS disclosure report. Fortunately, CMS makes notice creation easy by providing templates and instructions.

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