Medicare Part D Creditable Coverage Notices: What Employers Need to Know Before October 15

Employers sponsoring group health plans that offer prescription drug coverage are required to provide Medicare Part D creditable coverage notices to Medicare-eligible individuals. These notices help individuals determine whether delaying enrollment in Medicare Part D could result in a late-enrollment penalty. For most employers, compliance is straightforward, but it is important to understand who must receive the notice and when it must be provided.

Who must comply

All group health plan sponsors that offer prescription drug benefits, regardless of plan year, plan size, employer size, grandfather status, or whether the plan is insured or self-funded.

Deadline to comply

Annual Deadline: Prior to October 15 of each year. “Prior to” means any time in the 12 months preceding October 15.

Practical Tip: Employers that already distributed the notice within the last 12 months, such as during open enrollment, and include the notice in new hire benefit materials generally do not need to redistribute it before October 15 unless the creditable coverage status has changed.

How do employers comply?

Employers satisfy the requirement by distributing a customized Medicare Part D Notice of Creditable Coverage (or Notice of Non-Creditable Coverage, as applicable) to Medicare-eligible individuals enrolled in or eligible for prescription drug coverage. The model notices should be customized for your employees.

Distribution Requirements

Employers typically do not know if a dependent is eligible for Medicare due to disability or end-stage renal disease; therefore, IMA recommends providing the notice to all eligible employees.

• Employers are only required to provide one Notice of Creditable Coverage per household even if more than one member of the household is covered by the group health plan and eligible for Medicare.
• Delivery Methods: CMS prefers employers to distribute by hand or mail. However, electronic distribution may be permissible as outlined in more detail below. If electronic delivery is not an option, employers may also distribute via the following methods: hand delivery, mail, and it can be distributed with the Summary Plan Description (SPD) or other enrollment materials if its significance is sufficiently conveyed to recipients.

Electronic Distribution

While CMS generally prefers paper delivery, electronic distribution may be permitted if employees have regular access to a computer as part of their job duties. Employers may also use electronic delivery for other employees who have provided appropriate consent. When notices are delivered electronically, participants should be reminded that they are responsible for providing a copy to any Medicare-eligible dependents covered under the plan.

Who must receive the notice?

The notice must be provided to any individual enrolled in or eligible for the employer’s prescription drug coverage who may be eligible for Medicare. This can include:

• Active employees eligible for Medicare
• Medicare-eligible spouses
• Medicare-eligible dependents
• COBRA participants eligible for Medicare
• Retirees eligible for Medicare
• Medicare-eligible spouses and dependents of retiree

Key employer takeaways

• Confirm whether plan’s prescription drug coverage is creditable or non-creditable.
• Ensure that the customized notice is distributed within the required timeframe.
  • Tip: Because employers may not know whether spouses or dependents qualify for Medicare, distributing the notice broadly to eligible employees is often the most effective compliance strategy.

Employers should note that they do not need to send a separate notice now if both statements below are accurate:

• The notice was distributed within the last 12 months of October 15, such as during open enrollment, AND
• The notice is included in new hire benefit materials.

More information regarding creditable coverage can be found here.

IMA will continue to monitor regulator guidance and offer meaningful, practical, timely information. This material should not be considered as a substitute for legal, tax and/or actuarial advice. Contact the appropriate professional counsel for such matters. These materials are not exhaustive and are subject to possible changes in applicable laws, rules, and regulations and their interpretations.

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