Employers must provide a written notice on an annual basis to any Medicare-eligible individuals who are covered under a group health plan that includes prescription drug coverage. The notice is required to include information as to whether the prescription drug coverage is considered to be creditable. In other words, is the prescription drug coverage at least as good as the standard Medicare Part D plan? 

 

Anyone who is eligible for Medicare and delays enrollment in Part D is subject to a late enrollment penalty unless they have creditable coverage elsewhere. The late enrollment penalty is 1% of the “base beneficiary premium” for every full month a Medicare-eligible person is without creditable coverage and forgoes enrollment in Part D. The base beneficiary premium for 2017 is $35.63 according to the Centers for Medicare and Medicaid Services (CMS). The intent of the notice is to help Medicare-eligible individuals understand if they may be subject to a late enrollment penalty if they delay enrollment in Part D.    

 

There are one of two notices that an employer would have to provide to a Medicare-eligible individual. A creditable coverage notice should be provided when coverage is at least as good as the standard Medicare Part D plan. A non-creditable coverage notice should be provided when coverage fails to meet that requirement. CMS has provided a “Simplified Determination” document to help employers understand if their coverage is creditable or non-creditable. Most prescription drug coverage offered under group health plans will be considered creditable.  

 

The notice must be distributed by October 14th which is the day prior to the start of the Medicare Advantage and Part D annual enrollment period. The annual enrollment period will run from October 15th through December 7th. The notice must also be distributed at other times, such as when a Medicare-eligible person first joins the plan.    

 

The notice should be provided to actively working employees and their dependents who are eligible for Medicare, including those who become eligible for Medicare due to a disability. In addition, COBRA beneficiaries and covered retirees who are eligible for Medicare should be provided a notice.  

 

Model notices are available for employers to use in English and Spanish. 

 

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