Plan sponsors must tell Medicare Part D eligible individuals whether their prescription drug coverage is creditable so that these individuals can compare their employer’s prescription coverage with the coverage provided under a Medicare Part D plan. The plan sponsor disclosure notice must be provided, at a minimum, upon the following five occasions:
- prior to commencement of the annual coordinated election period for Part D – October 15th through December 7th;
- prior to an individual’s initial enrollment period for Part D – generally at the 65th birthday;
- prior to the effective date of coverage for any Part D eligible individual who enrolls in the employer’s prescription drug coverage – this could be at the time of hire, during the middle of the year after a change in family status, during open enrollment, etc.;
- whenever the employer no longer offers prescription drug coverage or changes it so that it is no longer creditable or becomes creditable – this is generally on the health plan’s anniversary date ; and
- upon request by the Part D eligible individual.
It is important that Part D eligible individuals know if the group health plan they are enrolled in is considered non-creditable prescription drug coverage. Part D eligible individuals who opt out of Medicare Part D coverage to be enrolled in non-creditable group coverage will likely be subject to a substantial permanent Late Enrollment Penalty in the form of higher premiums in the event they choose to enroll in Part D coverage at any time after the end of their Initial Part D Enrollment Period.
Medicare Part D disclosure notices can be distributed to participants in many different ways and need not be sent as a separate mailing. While there is no guidance as to the types of mailing procedures required, it is important that employers develop a policy for distribution and apply it uniformly and consistently. Although CMS prefers that employers provide paper documents, electronic delivery is permissible. Employers that distribute the Part D notices electronically should follow the DOL’s electronic disclosure requirements.
See the following document for additional information regarding the Medicare Part D disclosure requirement:
Please note that the information contained in this document is designed to provide authoritative and accurate information, in regard to the subject matter covered. However, it is not provided as legal or tax advice and no representation is made as to the sufficiency for your specific company’s needs. This document should be reviewed by your legal counsel or tax consultant before use.
Additionally, the messages and content within the Pittsburgh Health Care Reform group do not reflect the advisory services of Henderson Brothers, Inc.
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