1. You must determine if the prescription plan you offer meets the creditable coverage standard established by CMS.
2. By October 15 of each year, you must communicate if your plan’s drug coverage is creditable or non-creditable to all the Medicare eligible beneficiaries covered by your prescription drug plan.
3. You will also be required to share the creditable coverage status of your plan with CMS. This is done by accessing the CMS website and filling out an on-line notice to CMS in the Disclosure section of the website. CMS provides all the details and descriptions of this process on this website link and we recommend you become familiar with it. https://www.cms.gov/CreditableCoverage/40_CCDisclosure.asp

Here is a summary of the guidelines for when you need to submit the notice:

• a. Disclosure of creditable coverage status must be provided within 60 days after the beginning date of the plan year for which the entity is providing the disclosure to CMS.
• b. Within 30 days after the termination of the prescription drug plan.
• c. Within 30 days after any change in the creditable coverage status of the prescription drug plan.

As an option, if your drug plan is creditable, you can choose to pursue the 28 percent tax free Retiree Drug Subsidy. To do so, it will require additional testing of your drug plan beyond the creditability test and you must submit an application to CMS 90 days prior to the beginning of your “plan year”. Plan year is defined as the date your annual coverage benefits are renewed or begin.

Why do employers need to send Creditable Coverage Notices?

The notice of creditable coverage is required so that Medicare-eligible beneficiaries will know if they should remain in their current group prescription drug program or if they need to enroll in a Medicare Part D
plan.  If a group’s coverage is not creditable, then the Medicare-eligible beneficiaries in that group will need to enroll in Medicare Part D when they become eligible or they will be charged the 1 percent of premium penalty
for each month they choose not to partake in the Part D program.  If the group’s coverage is creditable, then the Medicare-eligible beneficiaries do not have to sign up for Medicare Part D. The creditable coverage notices they receive from you will be accepted as evidence of coverage andCMS will waive the penalty if the beneficiary chooses to enroll in the Part D program at the end of your plan year.

Employers who do not comply with the creditable coverage determination and notification requirements established by CMS will face government penalties themselves.  Creditable Coverage explainedCMS defines “Creditable Coverage” to mean that the employer’s drug plan is “as generous as, or more generous than” the standard coverage under the new Medicare Part D prescription drug benefit. In other words, the expected value of claims paid under your plan are as much as the value of claims that would be paid under the standard Medicare Part D benefit. 

When and how do you send the Notices?
At a minimum, disclosure to the employees must be made at the following times:
1. Before October 15, each year
2.Before an individual’s Initial Enrollment Period for Part D (as they age in)
3. Before the effective date of coverage for any Medicare-eligible individual that joins the plan
4.Whenever prescription drug coverage ends or changes so that it is no longer creditable or becomes creditable
5. Upon a beneficiary’s request

If the creditable coverage disclosure notice is provided to all plan participants, Items 1 and 2 are met. In order to avoid ongoing mailings to members as they become eligible, it’s a good idea to send the Notice of reditable Coverage to those who will become eligible in the next 12 months along with those who are currently eligible and to any new employees who are Medicare eligible. The Notice of Creditable Coverage does not need to be sent as a separate mailing. Here are some options:

• Include it with other plan materials such as enrollment materials or plan change letters. The notice must be referred to prominently – in at least a 14-point font in a separate box, bolded or as a reference to the section where the notice appears and offset on the first page of the information packaging.  Suggested wording: “If you have Medicare or will become eligible for Medicare in the next 12 months, a new federal law gives you more choices about your prescription drug coverage.
• Send as a stand-alone mailing using standard letter format. We have included the link to CMS’s new model notices for Creditable and Non-creditable coverage: http://www.cms.hhs.gov/CreditableCoverage
• E-mail conforming to these points:
  • A valid e-mail address and beneficiary consent must be provided to plan sponsor.
  • Before consent a beneficiary must be informed of the right to withdraw consent, how to update their address, and software requirements.
  • The beneficiary must indicate he or she has adequate access to e-mail.
  • The notice must also be posted on the employer’s Web site.
  • Beneficiaries must be informed of their right to obtain a paper version.