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Medicare requires annual notifications from health plan sponsors (Employers like you) which disclose important facts to individuals who are eligible for Medicare Part D.
This annual disclosure requirement is important because it impacts Medicare beneficiaries who are not covered by prescription (RX) coverage and who do not elect Medicare Part D will likely pay higher insurance premiums down the road. Employers and Plan Administrators should determine if their prescription drug coverage is considered "creditable" or "non-creditable" in preparation for the meeting the notification requirement. Persuant to Medicare Part D rules, the notice is due before October 15th, 2018.
What Is Creditable and Non-Creditable?
The GPH's prescription drug plan would be considered "creditable" if its value is equal to or greater than the actual value of the standard Medicare D RX coverage. The official determination can be made through actuarial measures. As an example of how this directly works with the prescription drug benefits, ABC company needs to determine if the plan's prescription coverage is equal to or greater than the projected amount of claims paid out under the Medicare Part D prescription drug benefit.
Medicare does require that a notice be issued for creditable and non-creditable prescription drug benefit plans. There are model notices for each.
Does Medicare Provide Notice Information?
The Centers for Medicare and Medicaid Services (CMS) does provide model notices in both English and Spanish for the Employer's use in fulfilling the mandatory notice requirements.
Model Notice Creditable Coverage | Model Notice Non-Creditable Coverage
These model notices can be bypassed by an Employer group that wishes to obtain a similar notice from an attorney as long as the verbiage requirements are met.
How Do I Know Who Should Receive the Notices and When?
Per Federal mandate, there is a general timeframe during which the notices must be provided:
The disclosure notices must be provided to individuals who are eligible for Medicare Part D who are covered by, or apply for the group health plan's RX coverage. Individuals who are eligible for Medicare Part D could include active employees, leave of absence employees (or individuals who have become disabled), retiree beneficiaries, and COBRA participants. That being said, a good best practice approach for plan administrators is to simply provide the notices to anyone who is participating in the plan.
Experts say that while the method of delivering notices can vary, best practice is to have the notice sent via regular first class mail with proof of mail to the employee and participating spouse at the last known address on file. Proof of mailing (certificate of mail) provides sufficient documentation with little overhead and administrative burden and satisfies notification requirements.
The information in this FAQ is provided for general informational purposes only, and may not reflect the current law in your jurisdiction. No information contained in this post should be construed as legal advice from CobraHelp. or the individual author, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through, this Post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country or other appropriate licensing jurisdiction
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