Medicare Part D Notices are Due Before Oct. 15, 2024

Each year, Medicare Part D requires group health plan sponsors to disclose to individuals who are eligible for Medicare Part D and to the Centers for Medicare and Medicaid Services (CMS) whether the health plan’s prescription drug coverage is creditable.

Plan sponsors must provide the annual disclosure notice to Medicare-eligible individuals before Oct. 15, 2024—the start date of the annual enrollment period for Medicare Part D. CMS has provided model disclosure notices for employers to use.

This notice is important because Medicare beneficiaries who are not covered by creditable prescription drug coverage and do not enroll in Medicare Part D when first eligible will likely pay higher premiums if they enroll at a later date. Although there are no specific penalties associated with this notice requirement, failing to provide the notice may be detrimental to employees.

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Highlights

• Medicare Part D imposes disclosure requirements on employers with group health plans that provide prescription drug coverage to Medicare-eligible individuals.
• Plan sponsors must provide the annual Medicare Part D creditable coverage disclosure notices to individuals before Oct. 15, 2024.
• Model notices are available for employers to use.

Important Dates

Oct. 15, 2024
Group health plan sponsors must provide the annual Medicare Part D notices to Medicare-eligible individuals before this deadline.

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Creditable Coverage

A group health plan’s prescription drug coverage is considered creditable if its actuarial value equals or exceeds the actuarial value of standard Medicare Part D prescription drug coverage. In general, this actuarial determination measures whether the expected amount of paid claims under the group health plan’s prescription drug coverage is at least as much as the expected amount of paid claims under the Medicare Part D prescription drug benefit. For plans that have multiple benefit options (for example, PPO, HDHP and HMO), the creditable coverage test must be applied separately for each benefit option.

Employers whose health care plans include prescription drugs must notify Medicare-eligible individuals before Oct. 15 of each year whether the drug coverage is creditable.

Model Notices

CMS has provided two model notices for employers to use:

• A Model Creditable Coverage Disclosure Notice for when the health plan’s prescription drug coverage is creditable; and
• A Model Non-creditable Coverage Disclosure Notice for when the health plan’s prescription drug coverage is not creditable.

These model notices are also available in Spanish on CMS’ website.

Employers are not required to use the model notices from CMS. However, if the model language is not used, a plan sponsor’s notices must include certain information, including a disclosure about whether the plan’s coverage is creditable and explanations of the meaning of creditable coverage and why creditable coverage is important.

Notice Recipients

The creditable coverage disclosure notice must be provided to Medicare Part D-eligible individuals who are covered by, or who apply for, the health plan’s prescription drug coverage. An individual is eligible for Medicare Part D if they:

• Are entitled to Medicare Part A or are enrolled in Medicare Part B; and
• Live in the service area of a Medicare Part D plan.

In general, an individual becomes entitled to Medicare Part A when they actually have Part A coverage, and not simply when they are first eligible. Medicare Part D-eligible individuals may include active employees, disabled employees, COBRA participants and retirees, as well as their covered spouses and dependents. 

As a practical matter, group health plan sponsors often provide the creditable coverage disclosure notices to all plan participants.

Timing of Notices

At a minimum, creditable coverage disclosure notices must be provided at the following times:

The DOL’s regulations for electronic delivery require that:

• The plan administrator uses appropriate and reasonable means to ensure that the system for furnishing documents results in actual receipt of transmitted information;
• Notice is provided to each recipient, at the time the electronic document is furnished, of the significance of the document; and
• A paper version of the document is available on request.

Also, if a plan sponsor uses electronic delivery, the sponsor must inform the plan participant that they are responsible for providing a copy of the electronic disclosure to their Medicare-eligible dependents covered under the group health plan.

In addition, the guidance from CMS indicates that a plan sponsor may provide a disclosure notice electronically to retirees if the Medicare-eligible individual has indicated to the sponsor that they have adequate access to electronic information. According to CMS, before individuals agree to receive their information via electronic means, they must be informed of their right to obtain a paper version, how to withdraw their consent and update address information, and any hardware or software requirements to access and retain the creditable coverage disclosure notice.

If the individual consents to an electronic transfer of the notice, a valid email address must be provided to the plan sponsor and the consent from the individual must be submitted electronically to the plan sponsor. According to CMS, this ensures the individual’s ability to access the information and that the system for furnishing these documents results in actual receipt. In addition to having the disclosure notice sent to the individual’s email address, the notice (except for personalized notices) must be posted on the plan sponsor’s website, if applicable, with a link on the sponsor’s homepage to the disclosure notice.

Disclosure to CMS

Plan sponsors are also required to disclose to CMS whether their prescription drug coverage is creditable. The disclosure must be made to CMS on an annual basis, or upon any change that affects whether the coverage is creditable. At a minimum, the CMS creditable coverage disclosure notice must be provided at the following times:

• Within 60 days after the beginning date of the plan year for which the entity is providing the form;
• Within 30 days after the termination of the prescription drug plan; and          
• Within 30 days after any change in the creditable coverage status of the prescription drug plan.

Plan sponsors are required to provide the disclosure notice to CMS through completion of the disclosure form on the CMS Creditable Coverage Disclosure webpage. This is the sole method for compliance with the CMS disclosure requirement, unless a specific exception applies.

Action Steps

Employers should confirm whether their health plans’ prescription drug coverage is creditable or non-creditable and prepare to send their Medicare Part D disclosure notices before Oct. 15, 2024. To make the process easier, employers often include Medicare Part D notices in open enrollment packets they send out prior to Oct. 15.

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