Medicare open enrollment begins October 15th – and with this comes a participant notice requirement for employers who sponsor group health insurance that includes prescription drug coverage.
The participant notice requirement applies regardless of the employer’s size or whether the group plan is insured or self-funded.
Notices must be distributed to Medicare eligible individuals at least annually before October 15. To simplify, most employers distribute the notice to all participants regardless of age or status.
Federal law requires employers to provide their eligible employees with information about Medicare Part D prescription drug coverage if their group health coverage offers outpatient prescription drug benefits. Individuals who fail to enroll in Medicare Part D prescription drug coverage when they’re first eligible may be subject to penalties if they go without “creditable” prescription drug coverage for 63 consecutive days or longer. As a result, both the Centers for Medicare and Medicaid Services (CMS) and individuals who are eligible for Medicare Part D coverage need information about whether an employer’s group health plan prescription coverage is creditable or noncreditable.
Creditable coverage means the group health plan’s prescription drug coverage is actuarially equivalent to Medicare’s Part D drug plans. In other words, the group plan is considered creditable if its drug benefits are as good as or better than Medicare’s benefits.
Model notices are available on the CMS website. Start with the model notice and then fill in the blanks and variable items as needed for each group health plan:
You may distribute the notice by first-class mail to the employee’s home or work address. A separate notice for the employee’s spouse or family members is not required unless the employer has information that they live at different addresses.
The notice is intended to be a stand-alone document. It may be distributed at the same time as other plan materials, but it should be a separate document. If the notice is incorporated with other material (such as stapled items or in a booklet format), the notice must appear in 14-point font, be bolded, offset, or boxed, and placed on the first page. Alternatively, in this case, you can put a reference (in 14-point font, either bolded, offset, or boxed) on the first page telling the reader where to find the notice within the material. Here is suggested text from the CMS for the first page:
“If you (and/or your dependents) have Medicare or will become eligible for Medicare in the next 12 months, a federal law gives you more choices about your prescription drug coverage. Please see page XX for more details.”
Email distribution is allowed but only for employees who have regular access to email as an integral part of their job duties. Employees also must have access to a printer, be notified that a hard copy of the notice is available at no cost upon request and be informed that they are responsible for sharing the notice with any Medicare-eligible family members who are enrolled in the employer’s group plan.
Separate from the participant notice requirement, employers also must disclose to the CMS whether their group health plan provides creditable or noncreditable coverage. To submit the plan’s disclosure, use the CMS online tool and follow the prompts. The online tool is the only method allowed for completing the required disclosure. The process generally takes 5 or 10 minutes to complete. It is due within 60 days after the start of the plan year; for instance, for calendar year plans, that will be March 1 (or February 29 if it is a leap year).