The Centers for Medicare and Medicaid Services (CMS) requires employers to annually notify plan participants whether the prescription drug coverage they have is creditable or not creditable toward Medicare Part D. Being “creditable” just means the prescription drug coverage pays, on average, at least as well as Medicare Part D.
Employers must provide this creditability notice prior to the Medicare Part D annual open enrollment which begins October 15 so that recipients will know whether they have creditable coverage (and it’s therefore safe to delay enrolling in Part D without a late enrollment penalty if they want to wait) or whether they have non-creditable coverage (and it’s therefore not safe to delay enrolling in Part D without a late enrollment penalty).
When the employer-sponsored prescription drug coverage is not creditable toward Part D, the individual should enroll in Part D as soon as they are eligible or as soon after as possible to mitigate late enrollment penalties, which keep increasing the longer you wait and are payable for life.
CMS prefers employers mail this notice to the home shortly before the Part D annual enrollment begins, just so it’s fresh in people’s minds, spouses also see it, and they don’t inadvertently miss the enrollment deadlines. However, some employers prefer to just hand it out at work, some prefer to post it online and email employees about it, and others prefer to just provide the notice once a year with their annual open enrollment materials. These are all acceptable, but note e-delivery requires the employee have electronic access at work as an integral part of their daily job or that they give consent to e-delivery.
These notices have been required for well over a decade now, and the model notices have not changed since 2011. But for employers that aren’t sure about their notice and want assistance tailoring the model notice to describe your plan, just let your IMA Benefits team know and we can share our ideas with you on how to tailor the model notice.
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.