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October 14th Deadline for Creditable Coverage

Employers with group health plans that provide prescription drug coverage must notify Medicare Part D eligible individuals by October 14 of each year about whether the drug coverage is at least as good as the Medicare Part D coverage (“creditable”). This is one of two annual Medicare Part D disclosures required to be completed each year by plan sponsors.

Disclosure to CMS

Plan sponsors must disclose to the Centers for Medicare and Medicaid Services (CMS) on an annual basis and at other select times, whether the plan’s prescription drug coverage is creditable or non-creditable. This disclosure is required regardless of whether the health plan’s coverage is primary or secondary to Medicare.  Plan sponsors are required to use the online form on the CMS Creditable Coverage Web page to make this disclosure. The disclosure must be made to CMS on an annual basis, within 60 days after the beginning of the plan year, and whenever any change occurs that affects whether the coverage is creditable.

Disclosure Notices to Participants

Disclosure notices must be provided to all Part D eligible individuals who are covered under or who apply for the plan’s prescription drug coverage. The disclosure notice requirement applies to Medicare beneficiaries who are active or retired employees, disabled or on COBRA, as well as Medicare beneficiaries who are covered as a spouse or dependent. To simplify, plan sponsors often decide to provide the disclosure notice to all plan participants.

The Centers for Medicare and Medicaid Services (CMS) has provided model notices for employers to use:

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

This notice is important because Medicare beneficiaries who are not covered by creditable prescription drug coverage and who choose not to enroll in Medicare Part D before the end of their initial enrollment period will likely pay higher premiums if they enroll in Medicare Part D at a later date. Although there are no specific penalties associated with this notice requirement, failing to provide the notice may trigger adverse employee relations issues.

Distributing Notices

Disclosure notices to plan participants may be provided through electronic means only if the plan sponsor follows the requirements set forth in Department of Labor regulations addressing electronic delivery. Disclosure notices may be sent with other plan participant information materials, for example, enrollment and/or renewal materials. If a disclosure notice is incorporated with other participant information, it must meet specific requirements for being prominent and conspicuous within the materials.

As a general rule, a single disclosure notice may be provided to the covered Medicare beneficiary and all of his or her Medicare eligible dependent(s) covered under the same plan. If it is known that any spouse or dependent that is Medicare eligible lives at a different address than where the participant materials were mailed, a separate notice must be provided to the Medicare eligible spouse or dependent residing at a different address.

If you have any questions about these requirements, please contact your BKS service team.