Upcoming Compliance Deadline: Medicare Notice of Creditable Coverage

Open enrollment is challenging enough for employers and HR. But to stay compliant, they must also keep in mind that many of their workers have options outside of their sponsored health plan, such as Medicare. Each year before Medicare’s annual enrollment period, employers who offer prescription drug coverage must notify Medicare-eligible employees of creditable coverage.

Find out more about creditable coverage and disclosure requirements to stay compliant.

What is Considered Creditable Coverage for Medicare?

According to the federal Centers for Medicare and Medicaid Services (CMS), creditable coverage refers to employer-sponsored prescription drug coverage that is at least as good as the subsidized Medicare Part D plan. In other words, if an employer’s drug plan is a better value for their Medicare-eligible enrollees, then it is considered creditable coverage. 

Those individuals can decline Medicare prescription coverage in favor of the lower payments in their current plan, but they may face a penalty for late Plan D enrollment if they do not maintain creditable coverage.

To aid in that decision, plan sponsors are obligated under the Medicare Modernization Act (MMA) to disclose whether or not their coverage is “creditable” before Medicare’s annual enrollment period, which begins November 15 each year.

What are the Creditable Coverage Disclosure Requirements?

Employers whose policies cover prescription drugs have two disclosure requirements: a written notice to eligible individuals and an online form for notifying the CMS.

1. Written Notice to Medicare-Eligible Individuals:

The MMA requires employers to notify eligible policyholders whether or not their plan qualifies as creditable coverage. To clarify, even if an employer’s drug plan is not considered creditable, they must still disclose that information to Medicare-eligible employees.

This written notice may be delivered electronically or by mail and must be issued each year prior to Medicare’s enrollment period. CMS provides notice letter templates on its website. The annual deadline is October 15.

2. Online Disclosure to CMS:

Employers must also complete the CMS online disclosure form to report the current status of their prescription drug plan. As with the written notice, even if an employer’s drug plan is not considered creditable, they must still comply by disclosing that information to CMS.

The online form must be completed each year within 60 days from the start of the plan year, within 30 days after discontinuing a plan, or within 30 days after any status change.

How Can Employers Stay Compliant?

Employers interested in learning more can find comprehensive guidance on the CMS website. In the rush of your own open enrollment planning, don’t overlook this important October 15 compliance deadline.

BerniePortal has a comprehensive HR Calendar to help your organization stay compliant.