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 October 6, 2006
MEDICARE PART D NOTICES OF CREDITABLE COVERAGE
MUST BE REVISED AND SENT BY NOVEMBER 15
On September 22, 2006, the Centers for Medicare & Medicaid Services (CMS) published in the Federal Register revised drafts of the Medicare Part D Notices of Creditable Coverage guidance and the three model Notices that it had released earlier this year:1
While the revisions to the Notices earlier this year added substantive changes, for the most part, the new edits to these documents just change the wording to make it clearer and more consistent with wording used in other Medicare publications. As part of its draft revisions, CMS makes one major substantive change: omission of the Social Security number from the model personalized notice. The newly published models are subject to a 30-day comment period, and may be changed again when final models are issued. Notices of Creditable (or Non-Creditable) Coverage must be sent to all Medicare-eligible plan participants and beneficiaries by November 15 annually, as is discussed later in this Capital Checkup. Background A Notice of Creditable Coverage tells an individual whether or not his or her coverage is “creditable” (i.e., whether the amount that the plan expects to pay in claims under the plan is at least as much as the expected amount of claims paid under Medicare’s standard Part D benefit.) Individuals with Creditable Coverage do not have to enroll in a Medicare Part D prescription drug plan during Medicare’s Annual Enrollment Period (November 15–December 31), and will not face a penalty if they decide to enroll in one of these plans later. Most group health plans that cover prescription drugs for active or retired individuals who are eligible for Medicare Part D are required to provide Notices of Creditable Coverage that conform to CMS guidance at least annually, regardless of whether they are applying for the Medicare Retiree Drug Subsidy. The only group health plans that are exempt from this requirement are those that contract with a Medicare Part D plan to provide prescription drug benefits (either a stand-alone Prescription Drug Plan or a Medicare Advantage plan with drug coverage) and those that have applied to CMS to act as a Medicare prescription drug plan themselves. Plan sponsors may use the CMS models (either the newly edited versions or the versions released earlier this year) or develop their own Notices, as long as they meet the content requirements set out in CMS’s creditable coverage guidance. The notices can be provided as a separate document, or as part of existing plan materials such as summary plan descriptions (SPDs) and open enrollment materials, if these materials meet specific format requirements. This Year's Notices Due Soon Notices must generally be sent to Medicare-eligible participants and beneficiaries by November 15 each year, so the participants and beneficiaries can decide whether to enroll in a Part D Plan during Medicare’s Annual Enrollment Period. Plan sponsors must update their 2005 Notices to reflect the new CMS rules and send them out shortly. Plan sponsors that chose to send out these notices to all participants by last year’s deadline of November 15, 2005, and to new participants as they join the plan, must send a notice this year before November 15, 2006. Plan sponsors that decided to send Notices only to Medicare Part D-eligible individuals last year must also send an annual notice to these individuals before the Medicare Annual Enrollment Period (begins November 15, 2006). Many plan sponsors are including Notices of Creditable Coverage with their plan’s open enrollment package. Doing this means that the plan sponsor can satisfy the Medicare requirements with a minimum of extra effort. Finally, plan sponsors should remember to file with CMS an annual disclosure form confirming that their Notices of Creditable (or Non-Creditable) Coverage were provided to participants and beneficiaries. The disclosure must be filed within 60 days after the beginning of the plan year.2
As with all issues involving the interpretation or application of laws and regulations, plan sponsors should rely on their attorneys for authoritative advice. Segal can assist plan sponsors in determining whether they provide creditable coverage and in drafting the Notice. Segal can also be retained to work with plan sponsors on strategies for coordinating benefits with Medicare Part D and communicating this information to employees, retirees and their dependents.
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