Each September, IMA provides a reminder for employers to distribute the annual Medicare Part D notice before October 15 to:
- All enrolled employees and retirees,
- Participants continuing coverage outside of active full-time employment (such as a retiree plan, COBRA, or state continuation), and
- Enrolled dependents not residing with the employee.
Since employees and dependents can qualify for Medicare based on age, disability, or end-stage renal disease, it may not be easy to identify whom in each family will become eligible for Medicare over the next year, so providing to all enrolled is generally advised.
This annual notice explains whether the employer’s prescription drug coverage is “creditable” (i.e., pays at least as much as Medicare Part D pays for prescription drugs).
Those who don’t have creditable coverage and fail to enroll timely in Part D may be subject to late enrollment penalties payable for life. This is important for those becoming eligible for Medicare that are currently enrolled in a medical plan with non-creditable prescription drug coverage, such as most high deductible health plans (HDHPs) tied to a health savings account (HSA).
Providing the notice at your annual open enrollment is allowed, but since the Part D annual open enrollment begins October 15, the government encourages providing it just before then so employees and dependents have a fresh reminder to evaluate whether Part D enrollment is needed.
Whatever timing you decide, here are some rules to know:
- DOL electronic delivery rules apply. 2009 guidance permits delivering this notice electronically to employees with access to a computer as an integral part of their daily job (per the DOL’s e-delivery rules) or to anyone that gives proper consent. When posted electronically, employees must be notified each year via email, postcard, or other means of:
- the significance of the notice,
- instructions to retrieve it or request a free paper copy, and
- a heads-up that only providing to the employee means the employee is obligated to provide to any enrolled dependents that might be eligible for Part D.
- Separate notice to certain enrolled non-employees. Despite notice to the employee being sufficient as notice to the family, the employer must mail a separate notice to an enrolled dependent known to reside apart from the employee and to those enrolled under COBRA or retiree coverage. It can tend to be impractical to get their consent to e-delivery.
- Must be “prominent and conspicuous.” Under this standard, it would ideally be a separate notice. However, if bundled into a booklet, it “must be prominently referenced in at least 14-point font in a separate box, bolded or offset on the first page” (i.e., by the table of contents).
The Center for Medicare and Medicaid Services (CMS) provides model notices, and the current versions have not changed since 2011.
- While employers are not required to use the models, there is required content employers must disclose and additional content which CMS recommends. Each model notice covers it all.
- Since CMS only provides the model notices in PDF, we have them in Word format below:
- Model Creditable Coverage Notice (also in Spanish)
- Model Non-Creditable Coverage Notice (also in Spanish)
- Please note there are bracketed portions of the model notice you must tailor.
- IMA has tailored the models, so feel free to ask your IMA Benefits team if interested.
- IMA has prepared an optional cover letter which may help explain the notice to participants.
- The models provide an optional box on page 3 which isn’t necessary for the annual mailing.
- If the plan loses creditable coverage status, that’s when this box gets personalized to each employee.
Also don’t forget to…
- Keep an audit trail. In the event an employee experiences a Part D late enrollment penalty, it may be best to have some proof you provided adequate communications.
- Notify CMS shortly after renewal each year.
- Notify CMS at this website of your prescription benefits’ creditable or non-creditable status within 60 days of renewal, or within 30 days of a change in creditability.
- Provide an abbreviated notice to new hires.
An abbreviated notice can be provided (rather than the full notice) to help new hires evaluate their Part D enrollment timing and penalty exposure.
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.