Medicare Part D Disclosure Requirements

Medicare Part D Notification Requirements for Creditable Coverage

On January 1, 2006, the Centers for Medicare and Medicaid Services (CMS) introduced Medicare Part D, which offers prescription drug coverage to all Medicare beneficiaries. With the new program, Medicare-eligible enrollees were urged to participate in the standard Medicare Part D or another “creditable” prescription drug plan to avoid late enrollment fees.

Coverage is defined as “creditable” when its actuarial value equals or exceeds the standard Medicare Part D prescription drug benefit. In general, the actuarial value of the benefit is determined by whether or not the prescription drug coverage is expected to pay out on average at least as much as the standard Medicare Part D coverage would pay in a calendar year. If the coverage does not equal or exceed the value of the standard Medicare Part D benefit, it is considered “non­creditable”.

What Employers Need to Do

If your prescription drug plan covers any Medicare-eligible individuals, federal law requires two key disclosures:

1. Notify Individuals About Their Coverage

Each year, before October 15, you must send a written notice to Medicare-eligible individuals explaining whether your prescription drug coverage is creditable—meaning it’s expected to pay, on average, as much as Medicare Part D.

You also need to send this notice:

• When someone first enrolls in your plan
• And at other times required by federal regulations

This applies to:

• Active employees and their dependents
• Individuals on COBRA and their dependents
• Disabled individuals
• Retirees and their dependents

Why this matters: If Medicare-eligible individuals go 63 days or more without creditable coverage, they may face a lifetime late enrollment penalty when they enroll in Medicare Part D. Your notice helps them avoid that penalty.

Additional information on this requirement can be found here.

2. Report to CMS

You also need to submit the Online Disclosure to CMS Form each year to report your plan’s creditable coverage status.

That form must be submitted:

• Within 60 days of the start of your plan year
• Within 30 days if your plan ends
• Within 30 days of any change to your plan’s creditable coverage status

Additional information on this requirement can be found here.

The CMS created this webpage to provide guidance documents relating to Creditable Coverage requirements for employers.