The 2016 Medicare Part D annual enrollment period will begin on October 15, 2015 and run through December 7, 2015. Medicare beneficiaries can enroll in a Part D drug plan or make changes to existing coverage during this time period. Enrollment can be done through a stand-alone drug plan or a Medicare Advantage plan that integrates coverage for medical and drug expenses.      

Employers who offer a health insurance plan with drug coverage must provide a written notice to any covered person who is Medicare-eligible prior to the start of the annual enrollment period each year (i.e. prior to Oct. 15th). The written notice must provide details as to whether the drug coverage included in the employer-sponsored plan is considered creditable coverage. In other words, the notification lets these individuals understand if the drug coverage on the employer plan is expected to cover, on average, at least as much as a standard Medicare Part D drug plan. 

The notice is important because Medicare-eligible individuals who delay enrollment in a Part D plan are subject to late enrollment penalties (in the form of higher premiums) unless they have creditable drug coverage elsewhere. The penalties increase every month a person could’ve been enrolled in a Part D plan and did not, but again these penalties are waived if creditable coverage is maintained elsewhere. In many circumstances, an employer may not know every employee, retiree, spouse, child, dependent or COBRA beneficiary that is Medicare-eligible. As a general rule of thumb, employers may want to distribute this notice to all plan participants to guarantee every covered Medicare-eligible beneficiary receives the proper notification.   

Employers are also supposed to report the creditable coverage status of their drug plans to CMS within 60 days of the start of each plan year. That way if someone enrolls in a Part D plan after their original opportunity, CMS will have a record to verify if the employer plan had creditable drug coverage, and then they can waive any late enrollment penalty that would otherwise apply. 

This CMS Website has helpful information for employers, including instructions on the notification requirements and model template notices that can be distributed to Medicare-eligible individuals.  

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The materials contained within this communication are provided for informational purposes only and do not constitute legal or tax advice.